Cottco targets 150 000 tonnes

ZIMBABWE’S biggest cotton dealer, Cottco, said it would nearly double volumes following a good rainfall season and export over 70% of its output.

The State-run Cottco Holdings Limited whose shares were suspended from the Zimbabwe Stock Exchange about six years ago, said it was targeting 150 000 metric tonnes (mt) of cotton this year.

Cottco’s volumes ended at 82 479mt during the 2019/20 marketing season.

After prices were battered by COVID-19-induced global lockdowns in 2020, cotton markets are positioning for a boom this year as demand firms under low throughput.

With about 90% share of the domestic market, Cottco produces the crop under a contract system before processing it for both the domestic and international markets.

It also handles cotton produced under the Presidential Input Scheme, which has been dogged by late payment to farmers.

But in May, the government said it was working on a plan to bring payment up to date and give farmers impetus to return to the fields during the 2021/22 farming season.

“Rainfall in the current agronomic season improved and was more widely distributed than in the past season,” said acting company secretary, Jaqueline Dube.

“Delivery of inputs to farmers also improved for the season under review. As a result, the company is targeting an intake of 150 000mt as compared to 82 479mt achieved in 2020. Lint prices, which collapsed last year due to a low price of US56 cents/Ib during the COVID-19 pandemic, have in 2021 firmed to levels of around US88 cents/Ib on the back of increased demand and low world stocks,” the firm said.

As at June 30, Cottco had taken delivery of 56 681mt tonnes of cotton from farmers, which is 38% of its annual target, as it began processing lint to service orders.

“The company’s order book is full for both lint and ginned seed and the company is forecasting to export 76% of its lint. The government has committed to clear the 2020 outstanding subsidy balances for farmers who grew cotton under the Presidential Input Scheme. The company’s cost containment activities and improved operational efficiencies should ensure that it does not incur a loss for the financial year ended March 31, 2022. Government is currently funding inputs for vulnerable cotton farmers through the Presidential Input Scheme. They have recently signalled an intention to increase their shareholding in Cottco Holdings from the current 37,1%. As a listed entity, shareholders will be kept abreast of proposed actions as we are made aware of them,” Dube added.-newsday.co.zw