Cotton ginners owe farmers $4bn
COTTON ginners are struggling to pay farmers for cotton deliveries made in the 2019/2020 season and have appealed to the Government for a $4 billion bailout to clear the arrears.
While the Government set the buying price of US$1,30 per kg, which was met with jubilation by the local farmers, the ginners say they are incapacitated given that international cotton price is about US$1,20 per kg.
This means that the ginners are already operating at a loss and have been failing to pay farmers their dues. Farmers on one hand are crying foul and have threatened to stop growing cotton after the Cotton Company of Zimbabwe (Cottco)’s decision to “pay them through groceries”.
Farmers say the move was unilateral and that the company is forcing them to accept groceries they do not want or need. They are also accusing the company of reneging on an earlier agreement to pay them in United States dollars and local currency.
The recent suspension of bulk mobile money payments by the Reserve Bank of Zimbabwe to curb illegal foreign currency trading, has resulted in cotton merchants, including Cottco, which administers the Presidential Free Inputs Scheme, switching to alternative payment systems including buying household goods, farm implements and productive assets for the farmers who delivered their crop to Cottco.
Addressing farmers, seed producers and cotton ginners during a one-day Zimbabwe Farmers Union (ZFU) 80th annual congress in Gweru yesterday, Cottco managing director, Mr Pius Manamike said ginners were broke. He said they owe farmers more than $4 billion, an amount he said they hoped the Government will avail through price support.
“We have challenges as ginners. For example, we bought a kg of cotton at US$1,30 and we sold it for US$1,20. That is the international price and we have no control over it. We need to pay salaries, pay the farmers, transport and all logistics. So, cotton companies are broke and that is why we owe farmers,” he said.
“We had budgeted $1,3 billion but we ended up at $4,3 billion to settle farmers’ debt. We have already spent $1,3 billion, meaning we are now in a $3 billion deficit. That is, us as Cottco and we have other companies who need the bail out. So, we are calling on the Government for price support.”
Mr Manamike expressed optimism that this year’s season will be good after the Government promised to bail them out. The treasury is set to release an additional $1,5 billion to settle outstanding payments to cotton farmers for the crop delivered this marketing season. This is in addition to the $1,8 billion the Government has already released so far to pay the farmers financed under the Presidential Inputs Support Scheme. The Government is the major financier of cotton through Cottco, and has announced that it is targeting inputs worth US$82 million this season to support 400 000 households.
Mr Manamike said they had been forced to look for alternative ways of paying farmers through giving them goods or commodities they need in place of cash. He disputed claims that they forced farmers to accept groceries or products they do not want.
“We went and borrowed groceries for some farmers who wanted groceries and it was a choice and an agreement between us,” said Mr Manamike.
Cotton Ginners Association secretary general, Mr Andrew Mupfava, said all ginners were facing a tough time ahead.
He called on the Government to subsidise the industry as is the case in other countries to ensure viability of the sector.
“We are now lobbying for subsidies from the Government because alone we won’t survive. Companies will fold if we continue like this. We owe our farmers more than $4 billion for the cotton they have already delivered and we don’t have that amount,” said Mr Mupfava.
“We have engaged our ministry and they have accepted our proposals and we are now waiting for a response from the Ministry of Finance and Economic Development on the way forward.”-chronicle.co.zw
