Government to pay cotton farmers directly • Moves to revamp Cottco

by | May 27, 2021 | Business, Local News | 0 comments


Hosia Mviringi

Government of Zimbabwe has approved plans directly pay cotton farmers who are owned money by COTTCO.
This comes as government has increased its shareholding in the company, setting sights on revamping its operations.
Recently, the cotton processor admitted to facing difficulties in remitting what it owes farmers in time.
Last season, cotton farmers were given a part-payment for their deliveries, a fraction was paid as grocery hampers and the balance is yet to be paid.
In yesterday`s post-cabinet briefing Minister of Information, Publicity and Broadcasting Services, Senator Monica Mutsvangwa revealed government concern and its undertaking to pay farmers directly as the company has failed in that regard.
She announced that government will increase its stake in the company and subsequently gain control of the cotton processor.
“Cabinet noted with concern the continued failure to pay farmers for cotton delivered to COTTCO and has decided to increase its shareholding in COTTCO to at least 51 per cent in tandem with it’s contribution in the company and apparent support to farmers and the need to spur rural industrialisation.
To this effect government will be paying farmers directly,” said Minister Mutsvangwa.
COTTCO controls above 80 per cent of the cotton market in Zimbabwe.
Their performance has a direct bearing on the revival of the textile sector and as such, Government had to make the timely intervention.
This follows a new pricing structure which was announced by government last month.
The lowest-paid grade of cotton going for ZWL$85, between US$0.86 – US$1, which is a huge improvement from the US$0.30c in previous seasons.
This price was well-received by farmers who described it as nearly viable.
Most farmers indicated a willingness not only to go back to the farms but to increase hectarage.

The cotton value chain has for years been plagued by poor pricing by private buyers who in most cases formed cartels that connived to underpay farmers.
These cartels were not willing to come to the table when it came to pre-planting crop financing.
By December 2020 farmers were still being owed up to ZWL$3billion in unpaid cotton proceeds.

This has discouraged new entrants into the lucrative sector while some farmers have opted to reduce hectarage and diversify into new cash crops such as Soya beans, Sunflower and Tobacco.
Cotton is a major foreign currency earner for the country with 70 per cent lint exported while 30 per cent is processed locally.