Presidential scheme props up cotton production

Zimbabwe’s biggest cotton dealer, Cottco Holdings Limited, has projected a 26 percent decline in total cotton intake for the year 2022 compared to last year citing the negative impact of poor weather conditions on yields.

Last year, total cotton intake stood at 116 000 tonnes, which was below the projected volume of 150 000 tonnes.

“The late onset of the rains and erratic rainfall patterns have led to a reduction in the expected intake to 85 600 tonnes for the season compared to 116 000 tonnes in 2021,” said acting company secretary Mrs Jacqueline Dube in a trading update for the first quarter to June 30, 2022.

However, production during the 2021/2022 season benefited significantly from the Presidential Free Cotton Inputs Scheme where hundreds of thousands farmers across the country received support from the Government to boost production.

The first quarter traditionally marks the commencement of the intake season and this year’s season officially commenced on June 13, 2022, which was about a month later than usual as the bulk of the crop was a late crop owing to the delay in the first rains.

As at July 13, 2022, intake stood at 34 497 tonnes and deliveries are expected to peak in July and August while payment modalities have been put in place for the current season to improve farmer viability and ensure payments are made timeously.

Ginning is also set to commence on the 18th of July 2022 with lint output being prioritised to support local spinners.

During the year to March 31, 2022, Cottco sold 50 187 tonnes of lint. Of that, 77 percent was exported while the remainder, 11 663 tonnes or 23 percent of the total, was sold to local customers.

Cottco’s local toll-spinning arrangement resulted in 937 tonnes of lint being value added. Ginned seed of 62 160 tonnes was sold mainly to local oil expressors and stock feed suppliers.

As at the start of the 2021 cotton buying season, Cottco had a legacy debt of $3,3 billion arising from the high producer prices set in 2020 season, against a declining lint price in the same period, unfavourable exchange rates and a prolonged buying season.

This, according to Mrs Dube, constrained the company’s ability to secure adequate funding for the 2021 season.

“Whilst the company was able to pay farmers $3 billion, the balance of $956 million was outstanding.

However, following the settlement of subsidy amounts outstanding from 2020, the outstanding payments will be settled in the current season.

“The company is forecasting to be current on its debts for the year ending 31 March 2023,” she said.

So far, cotton farmer subsidy funding from the Government was available in full on July 8, 2022 and considerable progress has been made in payments to farmers.

“Farmers have expressed general satisfaction with the current season’s payment modalities and Cottco anticipates an increase in the number of farmers for the 2022 planting season as it continues to roll out the Pfumvudza/Intwasa Programme, with the advantage that cotton is a drought tolerant crop,” said Mrs Dube.-herald.cozw