GOVERNMENT has set the 2017 cotton marketing price guide as farmers intensify harvesting of the white gold.
According to the Agriculture, Mechanisation and Irrigation Development Ministry, the 2017 cotton producer price has been set at 55US cents/kg for grade cotton.
The country is expecting about 110 000 tonnes of cotton this season up from
32 000 produced last year.
Cotton farmers, during the 2016/2017 cropping season, received free inputs under the Presidential Cotton Input Scheme.
During past marketing seasons, price disputes had become the order of the day with farmers arguing that prices offered by ginners were not viable.
Cotton production was proving to be a more lucrative business for ginners than farmers.
Government has had to intervene by setting a producer price for ginners.
Commenting on the issue of pricing, Zimbabwe Commercial Farmers Union president Wonder Chabikwa said players in the industry have to ensure farmers are rewarded for their efforts.
“Local farmers are affected if international prices are used as farmers in other countries get subsidised inputs which our farmers do not get,” said Chabikwa.
“Our farmers produce a yield less than 1 500 kg and it means they would get low returns.”
Price disputes should be avoided as they threaten the quality of the crop, said Chabikwa.
“Farmers tend to withhold their crop yet they do not have proper storage facilities and this is resulting in the wilting of the crop,” he said.
The agreed pricing formula takes into account three variables, namely; the growers’ cost of production; the ginners’ cost of production and the international lint price at the time the lint would have been sold. The formula also offers the sharing of sales proceeds from lint and ginned seed.
Unfortunately, because of the small size of the crop from Zimbabwe, local production cannot influence world market prices for lint on the international market, which reduces the domestic players to price takers.
To determine producer prices, the cotton industry uses international lint prices as a benchmark.
In most producer countries, the price is normally estimated because the actual price will be known at the time the lint is sold.
Ginners and farmers will monitor world markets and meet to review prices according to any developments that might occur to ensure all stakeholders’ needs are satisfied.
Farmers who are contracted to grow cotton are likely to get minimal profits as compared to those who grow ‘free cotton’.
Cotton is one of the crops that thrives on contracts.
Under the contract system, farmers are given seed and chemicals by ginners whom they have to repay after selling the crop.
Production of white gold over the past seasons lost its lustre.
Frustrated by poor returns, growers had abandoned the crop, turning to more lucrative crops such as tobacco.
Historical records show cotton was once the second largest foreign currency earner, after tobacco.
Cotton thrives in dryer regions such as Gokwe, Chiredzi, Chipinge and Masvingo.
An estimated 250 000 smallholder farmers produced 99 percent of the country’s cotton crop, mainly through contract farming schemes with cotton ginning companies.
At least 25 percent of the country’s rural population derived livelihoods from cotton farming.
The cotton industry had proved to be a significant source of income and employment that was vital for economic growth.
In 2014, the International Cotton Advisory Committee indicated that the country’s small-scale cotton farmers stood at 170 000, down from 200 000 in 2013.
Production levels dwindled.
In 2013 production levels dropped drastically from 353 000 kg produced in 2012 to 135 000 kg.
In 2014, 146 000 kg were produced and in 2015, levels plummeted again to less than 100 000 kg.
The Cotton Producers Association attributed low output to loss of confidence in the viability of cotton production by farmers.
Efforts have been made to redress the situation.
Government has stepped up support for cotton producers.
The country produces an average of
100 000 tonnes of lint per year out of a global production of 28 million tonnes.
The domestic industry consumes less than three percent of the cotton produced locally.
The cotton business has become an important export earner for Zimbabwe even though it is faced with increasing global competition, including the effects of controversial subsidies for cotton farmers in the US.
Given the depressed prices, survival of the local producer would be dependent on improving yields and quality as a way of enhancing viability.