Company operations and challenges in cotton sector
WHILE prospects look promising for maize and tobacco farmers due to good rains, the situation is different for cotton growers. They are reeling from major challenges such as leaching and water logging. The cotton farmers are also disgruntled as they are owed money for their crop amid threats posed by side marketing. Zimbabwe Independent chief business writer Taurai Mangudhla (TM) interviewed Cottco CEO Pious Manamike (PM), on various issues including company operations, challenges bedeviling the cotton sector, outlook for the season as well as plans to re-list on the Zimbabwe Stock Exchange (ZSE). Below are excerpts;
TM: How many farmers are registered under your company, how much crop did they produce in 2020? How does it compare with statistics for the past five years and peak performance?
PM: Cottco registered 388 169 farmers compared to 276 618 farmers in the 2019/2020 season and this is an improvement of 40%. The past season saw Cottco buying 82 400 tonnes and this was an improvement of 30% from the previous season and both seasons were affected by drought and the numbers retreated from a peak of 127 400 tonnes that was achieved in the past four years.
TM: What is your assessment of this season so far?
PM: The weather outlook for the season is promising as witnessed by the above normal rains received so far and we hope that the season will end on a high note though the rains are a bit too much for cotton. It's a bit too early to talk about the output as the variables that negatively affect cotton yields are still at play like high levels of leaching, water logging, chemicals being washed away after spraying and weeding pressure as farmers fail to get enough dry spells to weed.
TM: What initiatives have you put in place to make cotton farming attractive in the face of payment delays and demands by farmers to be paid in foreign currency?
PM: We engage farmers using our ground structures and we collaborate with various stakeholders that we work with to convince farmers to go back to the field. This was a success as evidenced by the growth in numbers registered. The farmers have accepted the promise by the government that the outstanding farmer payments will be settled.
TM: Availability of labour has been cited as a major challenge faced by cotton growers, what initiatives have you put in place to encourage mechanisation or improve farmers’ chances of accessing and affording labour throughout the season?
PM: We have been giving one hectare packages as a way of ensuring that the farmers can give their 100% attention to a small piece of land. We have, however, included herbicides in the input packages to cater for those with bigger hectarages. We also have imported mechanised cotton pickers that we will deploy to assist farmers with bigger hectarages.
TM: Bank withdrawal limits and mobile money transaction limits have hit the cotton industry given that a significant portion of farmers is unbanked, what have you done to ensure cotton growers have bank accounts?
PM: Last year when the mobile money platform was suspended we engaged all the banks to visit all the cotton growing areas and open bank accounts for the farmers.
TM: The major challenge with supporting farmers with inputs or any mode of contract farming has been side marketing, what is Cottco doing to deal with suck risks?
PM: Side marketing is a challenge but is under control. Side marketing is controlled by our regulator the Agricultural Marketing Authority (AMA)
TM: With estimates the world population will rise to nine billion in 2030, increasing food demand by 40%, what is the future for Zimbabwe’s cotton industry in light of this?
PM: With the rise in population we also expect the demand for cotton to go up as the population needs to be clothed though not at the same rate as there are substitutes to cotton like synthetic fibres that compete with cotton.
TM: What initiatives have you put in place to ensure cotton farming remains attractive despite volatility of prices?
PM: In addition to the Presidential Inputs Scheme that provides free inputs to the farmers, we have also launched and rolled out a high yielding hybrid seed that will make cotton farming viable to the farmer even without the free inputs scheme.
TM: There has been some talk around Cottco listing on the Zimbabwe Stock Exchange. Can you enlighten us around the vision and give an update of the journey so far?
PM: Cottco Holdings Limited went into voluntary suspension from the Zimbabwe Stock Exchange and with the coming in of a board of directors, we are working at fulfilling all the regulatory requirements for the company to restore its listing.
TM: In your view, how much funding does Cottco require and for what major areas?
PM: Every year Cottco requires working capital funding to buy the crop and this has been funded by financial institutions and the quantum depends on the crop to be bought in that season. Without giving the numbers because its work in progress, the company is also looking at raising funding to upgrade and modernise its ginneries.