Cottco resumes payments after liquidity crisis

The Cotton Company of Zimbabwe (Cottco), has resumed payments to farmers after liquidity constraints forced the country’s largest cotton company to stop payments.

With the marketing season almost halfway through, Cottco stopped payments after it failed to secure money from the banks. This will potentially force the farmers to sell their produce to other players, a practice known as side-marketing.

The Government, through Cottco, is the major financier of cotton production in the country.

Under the Presidential Free Inputs Scheme, Cottco supports nearly 300 000 households, thus making the scheme important for the poor and marginalised families.

“The Cotton Company of Zimbabwe would like to assure farmers that payments for seed cotton delivered to depots and common buying points are now resuming after engagement with relevant authorities,” chairman Sifelani Jabangwe said.

“The delays were a result of the prevailing liquidity position in the country. Payments modalities are being refined in partnership with other stakeholders to ensure maximum convenience for farmers.

Cottco urges farmers to shun side marketing and continue delivering the crop to designated points,” Jabangwe added.

However, there is growing frustration among the farmers who are blaming the company for “poor planning”.

Some farmers are even threatening to withhold their commodity or sell to other merchants.

“We have had payment challenges for a couple of years and our patience is running out,” a Gokwe farmer, who declined to be identified said.

“They should not blame farmers for side marketing. I think it is an issue of poor planning on their part.”

An official with Cottco said the company had not been getting “reasonable funds” from the banks.

“What we are getting is a drop in the ocean,” said the official who preferred to remain anonymous because is not allowed to talk to the media.

Jabangwe said nearly 45 000 tonnes of cotton have so far been delivered and the company is still expecting a similar volume.

“Hopes are high that the full intake for the current season will double last year’s output which stood at 46 000 tonnes.”

The national output, including from private merchants is estimated at about 100 000 tonnes.
Zimbabwe’s cotton season runs from September and includes a growing phase from around October to December a harvesting and sales period from May to August.

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).

Running for the eighth straight season, the State-assisted scheme has seen cotton production recovering.

Despite occasional production dips during drought seasons, output expanded from 28 000 tonnes in 2014, the lowest in nearly two decades to 145 000 tonnes in the 2017/18 season.

Apart from free inputs, farmers also receive tillage services and agronomy support.

At peak, Zimbabwe produced 351 000 tonnes of cotton in the 2010/11 season and the Government has since set a target to raise production to 300 000 tonnes by 2025.

Zimbabwe mainly uses open-pollinated varieties but indications are that production could go up to as much as 600 000 tonnes with the use of hybrids seeds.

Experts are urging the Government to ramp up the use of hybrid seeds to boost productivity and cut the risk of crop failures as OPVs are getting more susceptible to diseases.-ebusinessweekly