Govt pays $66m to cotton farmers to clear arrears

Source: Govt pays $66m to cotton farmers to clear arrears | The Herald

Govt pays $66m to cotton farmers to clear arrears
Minister Masuka

Bulawayo Bureau

GOVERNMENT paid $66 million to cotton farmers last week as part of its commitment to clear the $1,5 billion outstanding payment for cotton deliveries made in 2020.

Cotton is a strategic crop in Zimbabwe and the Government has been supporting farmers to drive increased output so as to ensure transformation of rural livelihoods and their contribution to the accomplishment of an upper middle-income economy Vision 2030.

Through enhanced Government support, the country is reviving the cotton industry value chain. 

From the 28 000 tonnes realised in 2015, Zimbabwe expects to boost output to between 150 000 to 195 000 tonnes this year.

However, farmers have expressed frustration over delayed payments for last year’s deliveries.

This mainly followed the suspension of the transfer of monies to communities and cotton farmers in the wake of changes in financial sector regulations.

Inspired by the need to ensure viability of the cotton sector, the Government has committed to paying the outstanding $1,5 billion owed to farmers, which also arose from the background of a high-cost production base and the lower international prices for cotton.

“We have started paying the $1,5 billion that is outstanding and the first tranche of $66 million was paid mid last week,” Lands, Agriculture, Fisheries, Water and Rural Resettlement Minister, Dr Anxious Masuka, told Parliament on Wednesday.

“We urge all cotton growers to go to their nearest Cottco deports and ensure that they have valid accounts into which these payments can be made.  

“Initially, the delay was because the Treasury wanted to do a verification of all the farmers.  We then resolved that seeing  it would take longer and that would prejudice those that had accounts already.  

“So, that process where those that have accounts are being paid, it is happening.  I was in Zvipane on Saturday and I interacted with farmers that had started receiving their monies. 

“As Government, we apologise that farmers are being paid a season later and we hope that with the macro-economic stability now taking place in the country, we will be able to pay.”

Cottco is a private company in which the Government used to own 30 percent shareholding until last month when it increased its stake to 51 percent, said the minister.

“This means that the Government will now be able to investigate how Cottco operates like we do with GMB, which is a Government entity.  

“However, the Government has taken it upon itself to assist farmers and ensure that they are paid,” he said. 

“The Reserve Bank has already supported the cotton industry through guarantees and they should be getting $5 billion so that they are able to buy cotton.  

“They have been supported through a guarantee of US$10 million for them to be able to get foreign currency so that those who take their cotton can be paid a certain percentage in forex and some percentage in RTGS.  

“As we buy cotton, it is different from the way we buy maize and traditional grains. With GMB, we can sell these products to other farmers and to other countries and we get funding but with cotton, it has to be taken to the ginnery and then after that it is sold.”

To avoid the inconvenience experienced last year, Minister Masuka said this year farmers will be paid in three tranches in accordance with the grading system. Grade A has been pegged at $85 while Grade D is $56.

“Farmers will be paid immediately upon delivery, $34 per kg.

“ They will be paid an additional $22 a kg and then upon grading of their cotton, any cotton that then goes into grade B and A will also attract another premium,” Dr Masuka explained. 

“I would like to urge Honourable Members to spread the word so that we can communicate and communicate very accurately. Apologetic, however we have started to pay.” 

The minister said ideally when farmers deliver their produce, they ought to be paid for their effort timeously so that they can deploy those resources for preparation of the forthcoming season and to do other necessary tasks.  

Already through GMB, the Government has pledged to pay farmers within 72 hours for grain delivered to a depot and within five working days for grain delivered to a collection point.

As of Tuesday, this week, Dr Masuka said over 570 000 metric tonnes of grain worth over $18 billion had been delivered to GMB.  

“Treasury has done its best so far.  We have received under $13 billion in support from the Treasury and we have paid farmers.  The amount that is outstanding and over a week is just slightly under $2.5 billion and the Government is doing everything possible to ensure that we pay farmers timeously,” he said.