AMA licences six firms to buy cotton
SIX companies have been licensed to buy cotton this year in a promising marketing season likely to see a major rebound in the production of the “white gold.”
The buying points were officially opened on Monday, according to the Agriculture and Marketing Authority (AMA), which supervises the activities of the cotton firms.
Lands, Agriculture, Fisheries, Water, and Rural Development Minister Dr Anxious Masuka presided over a ceremony to officially open the season in Mahuwe in the Mbire district, about 140 kilometers northeast of the capital, Harare.
The Cotton Company of Zimbabwe, Southern Cotton, the Zimbabwe Cotton Consortium, Alliance, Shawasha, and New Cotton are the companies licensed to buy the crop.
This year, cotton production is expected to increase to 100 000 tonnes from about 54 000 tonnes last year, with nearly 80 percent of the crop having been funded by Cottco under the Presidential Free Cotton Inputs Scheme. Cotton farmers, like their tobacco counterparts, will be paid 85 percent in foreign currency.
The remainder will be paid in local currency at the official bank rate. The lowest grade will fetch US40c per kg while farmers will be paid US46c for the best quality grade (A).
“All systems are in place and we are looking for a smooth 2023 marketing season. We have deployed enough AMA clerks at all buying points and strict measures have also been put in place to curb side-marketing,” an AMA official said.
Cotton is one of Zimbabwe’s major agricultural export commodities and is mainly grown in marginalised areas, largely by small-scale farmers. Under the presidential inputs scheme arrangement, farmers are given seeds, fertilizer, and chemicals for free.
Private companies have since adopted a similar funding model. Cotton Producers and Marketers Association chairman Mr Steward Mubonderi said they were hoping for an orderly marketing season. “AMA has assured us that there will be enough clerks at the buying points and this will quicken the sale of cotton,” said Mr Mubonderi.
He also urged companies to ensure that cash was readily available. “Where companies cannot use platforms such as U.S dollar EcoCash or mobile money transfer agencies such as Mukuru, we encourage these companies to mobilize cash,” he said.
Cottco acting principal officer Munyaradzi Chikasha said the company will be paying the farmers using Mukuru, and EcoCash while discussions with OneMoney are being finalised.
He said another local financial services company has made an offer to facilitate the payments.
“We will try to mobilise cash in areas where some of these services are not available, but we are concerned about the risks of potential robberies,” said Chikasha.
With the onset of the marketing season, cotton lint futures have experienced a consolidation of gains above US86c per pound, reaching the US87c mark for the first time since February 7, mainly due to market expectations of a slight decrease in global cotton output for the upcoming year.
According to the latest World Agricultural Supply and Demand Estimates (WASDE) for 2023, a decline in cotton output is projected, particularly in China, which is facing challenges such as drought as well as in Turkey. In the US, the third-largest cotton producer globally, farmers are anticipated to plant 18 percent fewer acres of cotton this year.
This decline in cotton acreage is considered one of the most significant drops in cotton acreage witnessed this century, according to the report. On the demand side, the report indicates a significant increase in global mill use, particularly in countries such as India, China, and Pakistan. Additionally, both imports and exports of cotton are expected to rise, reflecting an active global cotton trade.
The bulk of Zimbabwe’s lint is sold on global markets but Zimbabwe is a price taker since it cannot compete with huge volumes produced by the major producers.