Zimbabwe: Government now sole buyer of cotton

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THE Agricultural Marketing Authority (AMA) has declared cotton a controlled commodity following a dispute over pricing between farmers and merchants.The Zimbabwe Farmers Union (ZFU) said the development means the government is now the sole buyer of the crop.

The Zimbabwe Farmers Union (ZFU) said the development means the government is now the sole buyer of the crop.

“Following the failure to agree on price between merchants and cotton farmers, government has declared cotton a controlled commodity with immediate effect. This means that the entire cotton crop will be purchased by government,” the ZFU said.

Farmers have been refusing to sell their crop citing low producer prices with buyers claiming a volatile international market has resulted in depressed lint prices.

Farmers have rejected the Merchants’ offer of about US$0,36 cents per kilogramme with no immediate end in sight to the dispute.

The ZFU said the farmers should continue to hold onto their crop until the problem is resolved.

“Farmers should start harvesting the crop and keep it whilst government is putting the machinery in place to buy the cotton,” the Union said.

“The producer price will soon be announced by the Minister of Agriculture, Mechanization and Irrigation Development. The Union encourages farmers to withhold their cotton while awaiting further government action.”

Cotton Ginners Association (CGA) president, David Mashingaidze, who is also the chief executive of the Cotton Company of Zimbabwe (Cottco), said producers and merchants had agreed on indicative producer prices in May this year.

The prices ranged from 36 cents per kg for D grade to 50 cents/kg for the A grade crop. But buyers who are able to pay more than the indicated prices were encouraged to do so.

Mashingaidze said the prices were arrived at after taking into consideration both the farmers and ginners production costs, the lint price on the international market as well as other market fundamentals.

“When price negotiations take place, all concerned parties are fully represented at such meetings. This means that farmers, buyers and government (AMA) meet, discuss and agree before prices can be announced,” he said.

“Unfortunately lint supply has outstripped consumption on the global market and this causes lint prices to fall hence the scenario that we are witnessing right now. There is a glut of lint with very few buyers because buyers are not buying for speculative reasons.

“Spinners have adopted a wait and see attitude as they are anticipating further price reductions. The question that they are asking is why buy now when we can buy later at a lower price?

“Yes, the current producer price is low and one can say the price is not fair because it is not viable to the farmer. On the other hand ginners are not in a position to pay farmers what they are demanding as those prices are not sustainable for their businesses.

“These pertinent concerns by both farmers and ginners need to be addressed objectively without killing the goose that lays the golden egg.”

Source: http://www.newzimbabwe.com/business-8178-Government+now+sole+buyer+of+cotton/business.aspx

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