Martin Kadzere Senior Business Reporter
GOVERNMENT has gazetted a Statutory Instrument making the cotton crop for the 2011/12 season a controlled commodity, effectively giving the State the power to fix price. Under the SI 106A of 2012,

buyers will be required to buy the crop at a price fixed by the Ministry of Agriculture, Mechanisation and Irrigation Development.
According to the law, if cotton buyers who provided funding for the crop fail to pay the amount set by the Government, they can make an application to the Grain

Marketing Board for reimbursement of their inputs.
Buyers provided the inputs used to produce the bulk of the cotton crop for the current season.

“Even a buyer who provided growers with inputs for the purpose of growing seed cotton fails to pay an amount equivalent to the amount fixed by the minister, he or she may make an application to the Grain Marketing Board for the reimbursement,” reads part of the Statutory Instrument.

The gazetting of the statutory instrument follows a deadlock between the farmers and the growers over the minimum price.
Cotton growers wanted a minimum price of US45c per kg while buyers, who contracted the bulk of the crop to the tune of US$43 million, were offering US29c.
Buyers say the prices that farmers were asking for were unsustainable in light of falling lint prices on the international market.

Globally, cotton farmers experience similar challenges with producer prices. But countries such as the US have managed to keep their farmers in production by providing subsidies. China also subsidises producers to keep them motivated.

Countries such as India have become more competitive through the use of biotechnology. In addition, they also provide minimum support prices.
Analysts say the move by the Government would discourage private investments in future.

“It is one of the industries that had been weaned off from Treasury as a result of growing support from the private sector,” said a Harare-based economist.
“Setting prices would certainly kill the sector. Instead of reimbursing merchants with inputs, Government should consider subsidies,

“After all, does GMB have the capacity to reimburse the buyers?”
Zimbabwe’s cotton output is expected to rise from 250 000 tonnes produced last year, to about 280 000 tonnes this year, according to the Cotton Ginners’ Association.