No joy for cotton farmers
COTTON farmers who are owed $3 billion in arrears for produce delivered this season will have a bleak festive season after merchants failed to pay in time, NewsDay Business can report. The State-run Cottco is among the biggest buyers of Zimbabwe’s cotton.
When Finance minister Mthuli Ncube announced the 2021 National Budget last month, he said he was aware of the problem and assured farmers that they would be paid their dues.
Last week government announced a new Cottco board led by former Confederation of Zimbabwe Industries president Sifelani Jabangwe, whose immediate task will be to make sure that farmers receive their funds in time to return to the fields for the 2020/21farming season.
There had been hope that the new board would consider their plight seriously and act.
But on Wednesday, farmers told NewsDay Business that there were yet to be paid, and many of them were struggling to raise money for the current season.
“Cotton farmers have not received any payment,” said Zimbabwe Commercial Farmers Union president Shadreck Makombe.
“I want to believe the new (Cottco) board will expeditiously solve the problem,”
Cotton Producers and Marketers Association national chairperson, Stewart Mubonderi said it was worrying that cotton farmers would have a bleak festive season as they had not been paid.
“It’s unfortunate farmers have not been paid yet and this is worrisome,” Mubonderi said.
Sibongile Dhliwayo a cotton farmer based in Checheche in Chipinge told this publication that she was owed $10 000 and failure to pay the amount by the merchants had left her in a precarious financial position especially during this festive season.
“It was my hope that I get the money before Christmas so that I buy food and clothes for my family, but I am really frustrated and depressed. That money means a lot to me, it’s my sweat, I need it,” Dhliwayo said.
Farmers said they were partly paid through groceries, and up to $3 billion was still outstanding after delays by merchants.
In June, Cabinet approved a price of $43,94 per kg for the 2020/21 cotton marketing season.
Under the arrangement, farmers were supposed to be paid US$10 for every cotton bale delivered to merchants.
About 38% of the value of a 200kg bale
would be paid for in cash under the arrangement, with the balance electronically transferred to farmers’ bank accounts.
However, the cash crisis that marred the season forced merchants to pay through groceries, according to union leaders.
Economist Victor Bhoroma highlighted that it was fundamental for authorities to promote cotton farming viability through promulgating a market determined price.
“Production will plummet due to viability issues on the back of high inflation and low producer prices. Remember 70% of the cotton produced in Zimbabwe is exported while 30% is ginned locally for domestic use, hence low production will also impact local clothing manufacturers,” Bhoroma said.
“There is a need for the government to change policy and allow a market determined price to prevail and restore viability for the hardworking cotton farmers. Additionally,
Treasury must issue a waiver to all cotton-buying companies registered with AMA not to deduct 10% Withholding Tax from the payments they make to the cotton farmers.”
Government targets 101 000 000kg of cotton in 2020.
Total output was 76 691 000 kg in 2019. Cotton production in Zimbabwe declined to an all-time low of 32 000 tonnes in 2016, from 84 000 tonnes in 2015, and 143 000 tonnes in 2014, after a decade-long spell of perceived lower prices averaging US$0,30 per kg.
From 2015, the government moved in to start sponsoring a free-inputs scheme to boost cotton production through Cottco, which has seen nearly 400 000 farmers constituting 90% of total cotton farmers benefit from the inputs.