Cottco taking prudent approach on spending
The Cotton Company of Zimbabwe (Cottco) says it is taking a prudent spending approach to avoid carryover debts, acting accounting officer Munyaradzi Chikasha said.
“We are being prudent…managing the little resource we have because we are avoiding a situation of debt carryover because it affects our cash flows,” said Chikasha.
This year, the company had a debt carryover of US$8 million and has been for the past two months struggling to pay the workers and suppliers. The company has however substantially reduced its debt to US$600 000 from the old facilities, Chikasha said.
He said the company had also managed to mobilize funds to pay salaries for May and June.
“As for salaries, we managed to mobilize resources for May salaries, and the workers were paid on Monday (last week) and this week, we should settle June obligations.”
On the 2023 intake, the company has so far received nearly 54 000 tonnes of raw cotton and paid US$8 million to farmers, leaving an outstanding balance of US$13 million.
Cottco has been struggling to draw down on its facilities with local banks due to liquidity constraints and management is hoping that the situation will improve once it starts exporting lint, or processed cotton. “We have started ginning and that should see revenue flows improving from lint sales,” said Chikasha. This year, Cottco, the biggest financer of cotton says production will double to 90 000 tonnes from last year.
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.
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
