Cotton farmers owed $1,5bn for last season’s crop

ZIMBABWE’s cotton farmers delivered their first 2021 bales last week, but returned home empty handed after buying points across the country failed to immediately release cash, according to sector leaders.

A further $1,5 billion is outstanding from last season’s produce.

As a result, farmers’ leaders said they were worried that they might not get paid for this year’s crop.

Government has 100% shareholding in the Cotton Company of Zimbabwe (Cottco), the biggest buyer of the country’s cotton output.

The Finance and Economic Development ministry indicated in December that it was taking steps to pay farmers their 2020 dues before the new season started.

Cotton Producers and Marketers Association chairperson Stewart Mubonderi said the sector was worried that there could be a repeat of the previous seasons where cotton farmers were given groceries as payment for their produce.

“Farmers are supposed to be paid $85 per kg,” Mubonderi told NewsDay Business.

“We are worried that we have last year’s balance of $1,5 billion to be paid to our farmers. Farmers in other crops are getting paid promptly. The marketing season started on Tuesday 18 May, but no payment has been done. It is clear that the money is not there at buying points. Cottco assured us that they will pay us at the end of the month and we hope they will fulfil their promise. We hope that this year’s payment will be done promptly. We expect the Agricultural Marketing Authority to provide clerks at each buying point unlike the previous years. This will quicken the payment process,” he said.

Zimbabwe Commercial Farmers Union (ZCFU) president Shadreck Makombe said a technical glitch had delayed payments.

“I understand there was a glitch in the system in terms of payment,” he said.

“That is why there were some inconveniences being experienced. That is the position we were told. But in terms of money, Treasury has assured us (that it will be paid),” Makombe said.

He said government had assured ZCFU that last year’s arrears would have been paid by the end of this month.

The government last season approved a cotton floor producer price of $43,94 per kg.

For each bale delivered to the market, farmers were promised US$10, while 38% of the value of a 200kg bale was to be paid for in Zimbabwe dollar cash.

The balance was transferred to the farmers’ mobile money wallets.

Farmers produced 70 000 metric tonnes of cotton last year, and this figure is expected to rise to 150 000 metric tonnes this season.

Cotton production in Zimbabwe declined to an all-time low of 32 000 tonnes in 2016, from 84 000 tonnes in 2015, and 143 000 tonnes in 2014, after a decade-long spell of lower prices, which averaged US$0,30 per kg.

From 2015, the government moved to introduce a free-inputs scheme through Cottco, to boost cotton production which has seen nearly 400 000 farmers constituting 90% of total cotton farmers benefiting.-newsday