Govt makes $1,8bn part payment for cotton

Source: Govt makes $1,8bn part payment for cotton – NewsDay Zimbabwe

Government has released $1,75 billion as part payment to thousands of cotton farmers who were owed a combined $2,5 billion.

Cottco chief executive officer Pius Manamike told NewsDay Business yesterday that $1,75 billion had been paid in three tranches since the end of last year.

“Government paid in three tranches, two tranches of $500 million each and then the third one of $750 million,” Manamike said.

“The balance is now $750 million and the plan is to have it paid off before the end of this month,” he added.

This comes as the government maintains incentives, including payment of an above market price, to encourage production of cotton across the country.

There have been concerns that late payment to cotton farmers, along with those producing such crops as maize, was contributing to a drop in production levels.

Cotton farmers are mostly paid in Zimbabwe dollars, which has been depreciating fast on both the parallel and official markets.

In many cases, affected farmers have ended up failing to procure inputs to return to production because of the depreciation of the local currency.

Cotton output has declined in the past decade, as farmers switched to other crops, such as tobacco, where they are paid in foreign currency.

Manamike said it was too early to make production estimates for the new season.

However, there have been concerns across the country that a mid-season dry spell that affected other crops could affect cotton output.

“So far so good, we just got some good rains last week, we are quite positive after the good rains of last week although it’s a bit too early because there are too many variables ahead,” Manamike said.

“The crop is still flowering, so we can’t really throw in projections at this stage,” he added.

Cottco is also mulling introducing micro-ginneries as part of its strategic remodelling, which is expected to see the company investing in oil production and fabric weaving technology.

“As we replace our old ginneries, we are going to devolve and put up right-sized ginneries at strategic rural business centres in line with the government’s devolution thrust and our parent ministry’s rural development mandate,” Manamike said.

Cottco is on an expansion drive that will see it transform into one of Africa’s biggest cotton dealers within 10 years.

The vision is to have a textile company that processes products from cotton, another oil company that processes oil from seed.