Treasury releases $500m for cotton farmers’ subsidy
Cotton farmers have started receiving their outstanding payments from the portion of the Government subsidy for last year’s cotton deliveries after Treasury released $500 million to clear the debts.
The Cotton Company of Zimbabwe confirmed payments had started for the amounts owing from the 2021 cropping season following the disbursement of the funding.
Cotton is a key source of income for hundreds of thousands of rural growers. The crop is also a strategically important export earner for Zimbabwe.
The company had embarked on exchange of cotton for groceries in order to settle some debts to the farmers relating to outstanding payments. But, some farmers decried the initiative.
Cottco managing director Pius Manamike confirmed to The Herald Finance & Business saying they still owed cotton farmers about $1,5 billion for the 2021 season.
He said the Treasury committed to disburse $500 million every week to clear the arrears.
“We have started paying the farmers their subsidies for the 2021 marketing season. As we speak, we owe the farmers $1,5 billion. We got $500 million from the Treasury.”
In order to ensure cotton farming remains viable, the Government last year generously committed an additional $22 per kg delivered by farmers as a subsidy payment.
“The total subsidy for 2021 was $2,53 billion and $500 million was released and paid to farmers during the third quarter ended December 31, 2021 and this week another $500 million was released to leave the debt at $1,53 billion,” said Mr Manamike.
The company in January said power shortages had delayed the ginning schedule. This came as 93 percent of the seed cotton intake had been ginned by December 31, 2021 and production was anticipated to end during last month.
Meanwhile, the Government recently approved a dual payment system for cotton farmers which will see them receive payment of their crop in United States dollars as well as Zimbabwe dollars.
“This payment modality means farmers will be paid US$30 for a bale of up to 250kgs” Agricultural Marketing Authority CEO Clever Isaya said.
The Government adopted climate-proofing agricultural practices for cotton production in the 2021/2022 cropping season to increase production levels.
Zimbabwean hand-picked cotton is in high demand across the world and the company’s order book exceeds production volumes.
The country’s cotton deliveries increased by 39 percent to 114 656 tonnes towards the end of the buying season of 2021 from 2020 total output of 82 479 tonnes.
“Cottco is reviewing projects for value addition and increased use of technology in its processes to enhance operational efficiencies,” said the company in its outlook report.-The Herald
