BY EVERSON MUSHAVA
GOVERNMENT delayed paying cotton farmers for last year’s crop after being misled by Cotton Company of Zimbabwe (Cottco) board chairman Sifelani Jabangwe, who claimed that the company had the capacity to settle the debt from lint sales, NewsDay has learnt.
Cotton farmers are owed $1,5 billion by Cottco for last year’s deliveries. At the time, the producer price of cotton was pegged at US$1,75 per kilogramme.
Last week, Lands ministry secretary John Basera appeared before the Parliamentary Portfolio Committee on Lands where he told MPs that the Finance ministry and the Reserve Bank of Zimbabwe were working out modalities to give Cottco the money to pay the farmers.
Cottco paid the farmers 30 cents per kilogramme from last year’s produce and government is yet to pay the difference from its pegged producer price of 105 cents, which is heavily subsidised to incentivise the farmers.
Finance ministry sources said government was forced to delay releasing the money after Jabangwe sent an email to Lands minister Anxious Masuka in February giving assurances that Cottco had the money to pay the farmers.
In the email, Jabangwe allegedly claimed Cottco management intended to sell the 15 000MT of lint at a cost of 55 cents per kg when the actual prices had gone up to 90 cents, a move that would prejudice the country by about US$15 million.
“We are currently holding a balance of unsold lint amounting to 15 000MT. Management tells me it’s allocated to customers but not paid for. The spot price had shot up to around 90 cents per pound,” read part of Jabangwe’s email to Masuka dated February 15.
“Management is telling us we have to sell at 55 cents per pound which they had discussed with the customers. This will prejudice the country and Cottco about US$15 million.
“I hope Dr Basera can help with reviewing this or he can recommend someone who is well-versed with agriculture sales contract processes for cotton who can advise on options available.”
Masuka, in his response said he had copied “RBZ governor John Mangudya and Finance minister Mthuli Ncube so they too are in the loop and can assist where required.”
Cotton is sold according to International Cotton Association by-laws and rules, which means prices agreed last year cannot be changed even if the price of the crop is raised.
Contacted for comment yesterday, Jabangwe denied misleading the government, saying his email was simply to apprise the minister of the situation on the ground.
“It is not true that the email caused delays in the payment of farmers,” Jabangwe said.
He acknowledged cotton was sold on forward contract, but said it could not be dispatched because of COVID-19.
Jabangwe said the contract could not be changed even if the prices changed, contradicting his email where he accused Cottco management of wanting to prejudice the company with over US$15 million by wanting to sell the lint at 55 cents and not 90 cents.
He said the email was an attempt to try to find out if the contracts could be negotiated.
Finance ministry spokesperson Clive Mphambela said farmers with bank accounts were paid last Friday, although none of the farmers contacted by NewsDay yesterday confirmed receiving the money. He said the delay in paying the farmers was caused by administrative bottlenecks.