Cotton prices remain depressed

via Cotton prices remain depressed | The Herald May 27, 2015 by Elita Chikwati

Cotton prices are expected to remain depressed this season, with merchants proposing to pay an interim price and later pay an adjustment based on grades.

This means merchants will pay a Grade D price for all the cotton and later pay the balance after grading.

The Zimbabwe Farmers Union weekly market guide update has revealed that cotton merchants plan to pay farmers an advance and later in October pay the remaining adjustment payment based on the grades.

The situation, according to the market guide, has been made worse by China that still has huge cotton stocks which will influence prices on the international market.

“Cotton prices are projected to remain flat heading into 2015 as China continues to hold large supplies of cotton and consumption rates remain low.

“It is believed that for now the Chinese policy is one of the major influencers of the market,” reads the ZFU market guide. “The Cotlook index A quotes a depressing $0,71 per pound.

“In Zimbabwe as the season progresses, the indications are that the cotton industry is in tremendous trouble as farmers failed to access adequate inputs from contractors.”

Some insiders in the cotton industry said ginners were suggesting to pay farmers a uniform price of $0,30 per kilogramme and later pay an adjustment according to the grades.

Zimbabwe Commercial Farmers Union president Mr Wonder Chabikwa yesterday said farmers could not trust ginners on the payment of adjustments as some have not been faithful before.

“During the past years, some ginners did not honour their promises and farmers cannot trust them now,” he said. “Farmers are not comfortable with the arrangement.”

Mr Chabikwa said the situation could be better if farmers could grade their crop and sell according to the grades.

He said the situation was unfortunate as farmers’ unions could not negotiate for better prices on behalf of the farmers,leaving cotton growers to negotiate with ginners as individuals.

“Buyers should be open enough and if they do not have enough money they should say it early so that farmers can make informed decisions,” said Mr Chabikwa.

“Farmers expect viable prices so they can make a profit. Every farmer wants to make a profit.”

Mr Chabikwa said the situation could improve if Zimbabwe could add value and export processed material.

“We have factories that can be used for value addition,” he said. “The merchants can also be encouraged to process the crop locally and the income can be used to support farmers.

“Zimbabwe has a comparative advantage on cotton since the crop can be grown in most parts of the country. We still have the potential to grow the crop and this could be achieved with support from regulatory framework.”

Agriculture, Mechanisation and Irrigation Development Minister Dr Joseph Made has on several occasions said cotton is an important crop, hence the inclusion of the crop under the Presidential Well Wishers Input Support Scheme.

Dr Made said cotton was a strategic crop as it also provided edible oil and was used for the manufacturing of livestock feed.