via CZI calls for criminalisation of side-marketing – DailyNews Live 24 November 2015
MUTARE – Confederation of Zimbabwe Industries (CZI) has called for the enactment of a law that criminalises “side-marketing” to protect agricultural financiers.
Side-marketing is when a farmer decides to sell their produce outside the contractual agreement after being supplied with inputs to grow the crop.
Over the last decade, many financial institutions and corporates have suffered huge losses after being prejudiced by unscrupulous farmers.
CZI president Busisa Moyo told industry stakeholders in Mutare on Thursday that such a law would protect financiers’ investment in elaborate input credit schemes that are being fleeced by small-holder farmers.
“Government should put in place a policy that criminalises side marketing if ever we are going to have sanity in the sector,” Moyo said.
“Cottco is now almost completely gone. Every year they would lose up to 50 percent of what they would have given to farmers… It may have had its own management problems but this has been its major problem. That’s the reality. We just have to criminalise it and will have sanity,” he added.
Cottco has been running an elaborate Input Credit Scheme under which it would commit its own funds on an annual basis to provide seasonal finance to smallholder farmers — most of them lacked collateral to qualify for commercial banks loans.
The company would also additionally provide technical assistance to farmers to manage their crop.
However, information at hand shows that Cottco lost most of this investment to farmers would sell their crop to other buyers and evaded loan repayments.
Once the largest cotton company in Zimbabwe, Cottco has been struggling with a legacy debt of over $41 million since dollarisation in 2009.
The company’s shares were suspended from trading on the Zimbabwe Stock Exchange in November last year after the troubled group applied for provisional judicial management to the High Court.
Rampant side-marketing in the cotton industry saw production declining to its lowest level in the last three seasons due to a reduction in inputs support to farmers resulting from the practice.
Output fell seven percent to 135 000 tonnes from 145 000 in the preceding season.
Besides low input support to farmers, production was negatively affected by changes in the rainfall patterns while many farmers also shifted from cotton farming in preference of better paying cash crops such as tobacco.