International cotton prices fell from $1.78 per pound last year to $1 per pound this month, a 43 per cent drop that makes it difficult for the Cotton Development Authority (Coda) to sustain the producer price of Sh65 it set last year.
“The proposed farm-gate price is not sustainable due to the prevailing international market,” said Coda marketing manager Samuel Lubanga.
“Based on the current international prices, farmers could see prices drop to between Sh50 and Sh55 per kilogramme,” he said.
The price review committee considers local cost of production and international market trends when adjusting prices.
Kenya’s harvesting season tends to work against growers as the Northern Hemisphere harvests before August, increasing supply in the market, leading to lower international prices when Kenyan farmers harvest from December.
In Eastern and Coast province, the harvest runs up to the end of March. Western and Nyanza provinces’ harvest season ends in February while Rift Valley province closes its harvest season in December.
Hold onto produce
Cotton growers were expecting higher farm-gate prices this season, banking on previous reviews that have seen costs rise to Sh65 per kilogramme up from Sh32 set in the previous year.
Rift Valley cotton farmers have opted to hold onto their produce for better prices while those in Coast are selling the commodity at Sh50 per kilogramme.
“Farmers are holding back over 600 tonnes hoping that the prices of the crop will improve in the coming weeks,” said David Njuguna, the chairman of the Lake Kenyatta Co-operative Society in Mpeketoni, which buys about 70 per cent of the produce in Lamu West.
Last year, the cooperative collected 135 tonnes of cotton and production was expected to increase this season with rise in farm- gate prices.
Lamu is the biggest producer of cotton in the Coast region which received 160 tonnes of seeds.
A decline in farm-gate prices would strain farmers’ ability to protect the crop from pests like meal bug, reducing production.
African Cotton and Textile Industries Federation chairman, Jaswinder Bedi had projected that farmers would earn up to Sh100 per kilogramme if the value chain was managed efficiently.
In the 1980s, the booming textile industry had boosted cotton farming in Kenya.
However, influx of textile imports reduced demand for cotton.