LIVINGSTONE MARUFU
Zimbabwe’s largest cotton producing company, the Cotton Company of Zimbabwe (Cottco), says higher production costs have severely put pressure on the company’s margins, Business Times can report.
Company secretary, Jacqueline Dube said the harsh economic environment has resulted in Cottco struggling to break even as they are buying inputs in US$ but selling in ZWL$ making it difficult to produce.
“The rising costs of local cotton production continue to put pressure on the company’s margins due to the various exchange rates prevalent on the market which are being used by some suppliers as a basis for costing,” Dube said.
Despite all the challenges, Cottco’s 2021 intake rose 39% to 114,656 metric tonnes against last year’s full year output of 82,479 metric tonnes.
Dube said national seed cotton production is estimated to be 130,000 metric tonnes meaning Cottco’s market share is approximately 88%.
She bemoaned prevalent side-marketing during the season which was further exacerbated by the shortage of wool packs resulting in Cottco’s market share declining by 2%.
“Authorities are committed to putting an end to side-marketing as reflected by the promulgation of Statutory Instrument 97 of 2021 and an increase in court convictions of perpetrators,” Dube said.
Cottco said a significant portion of the outstanding farmer payments for 2020 have been cleared, with the final payments of farmers who had not initially submitted banking details, expected to be cleared timeously.
The funding of the 2021 subsidy of ZWL$22 per kg is expected to be released any time from now to help farmers to head back to the fields, Dube said.
Cottco lost lint worth US$2.5m through fire in Checheche on October 4 2021.
The tonnage lost was insured and physical security at all sites has been increased while investigations of the cause of the fire are ongoing, she said.
In the outlook, Cottco is banking on an above average rainfall pattern in most cotton growing areas in the 2021/2022 agricultural season.
Farmers have commenced land preparation with a significant number of farmers expected to adopt precision agriculture under the Cotton Pfumvudza/Intwasa programme.
Dube expects this approach to promote focusing on provision of adequate plant nutrition and thus the farmers are expected to achieve higher yields.
This is expected to result in further growth in cotton volumes and also result in improvement in returns for both Cottco and the farmers in the upcoming season, she said.
