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Business Reporter —
INTERNATIONAL commodities company Olam has approached Cottco Holdings seeking a contract to manage the business, people with direct knowledge of the matter said. Through its local unit, the Singapore-headquartered company submitted a proposal to the Cottco board asking for a contract to manage the affairs of the firm.

Olam’s operations in Zimbabwe began in 2005 and the company runs an integrated cotton ginning model that provides inputs including seeds, fertilizers and chemicals on credit to farmers.

“It is a proposal which is supposed to go through certain processes,” said one source.

“But what Olam is basically asking for is a management contract and will get paid for that.”

No comment could be obtained from Olam at the time of going to press while questions sent to Cottco deputy chairperson Elliot Mugamu had not been responded to at the time of going to print. Government is in the process of taking over Cottco through the Zimbabwe Asset Management Company, a special vehicle owned by the Reserve Bank responsible for acquiring, managing and restructuring bad loans.

However, resistance is already building up among key stakeholders who feel giving Olam the management contract was tantamount to recreating “a price fixing cartel, which was previously operating under the guise of the Cotton Ginners Association”. Cottco pulled out of the CGA this year.

Ironically, Cottco paid highest price of 45c per kilogramme this season while other seven CGA members paid an average of 36c per kilogramme.

Some stakeholders, farmers in particular, also feel awarding a management contract to Olam would erode progress already made by the Government in reviving and restoring sanity in the industry. They blamed the entry of multiple players in the industry as a major source of the current problems, saying reverting back to pre-1995 monopoly was the most viable to restore the viability of the industry.

Already, there is a general feeling among key stakeholders that the opening up of the cotton sector to new players was the death knell for Zimbabwean cotton. From being one of global cotton’s top quality producers the sector had virtually collapsed.

The success of cotton in Zimbabwe was built around the Cottco inputs credit scheme which started in 1992 and ensured that farmers received adequate funding.

“As farmers we are so worried about such developments,” Cotton Producers and Marketers Association of Zimbabwe national organising secretary Stewart Mubonderi said.

“As stakeholders, we made an enquiry to understand what exactly is happening but they do not want to come out clear. As important stakeholders, we need to be engaged so that we can also make our contributions.

“Was Olam not part of the ‘mafia’ which destroyed the sector? Are Zimbabweans incapable of managing their affairs and how does this resolve working capital challenges? Viability is a key challenge for cotton farmers. How will this resolve it?” he added.