Late payment affects cotton production

June 23, 2022

LETTICIA MAGOMBO

 

The perpetual  delays on the payment of cotton farmers has  affected cotton production in the past few years resulting in the loss of appetite to grow the white gold.

Cotton, alongside tobacco, were the country’s highest earners of foreign currency but the delay in payments, collusion of prices by contractors and low foreign currency retention threshold have affected the two cash crops.

The white gold farmers have gone without payment for their crop from as far back as 2020 and with inflation ravaging the economy, growers earnings were reduced to pittance.

Zimbabwe Commercial Farmers’ Union president Shadreck Makombe told Business Times that cotton farmers were disheartened by the amount of time being taken to compensate them.

“…some of the money has taken two years or a year,” Makombe said.

He added that seasoned farmers have begun to leave the fields as it does not make economic sense to do a product, and have farming as a business but you are not getting money.

“So you cannot venture where there is a loss,” Makombe said.

“There are new entrants into the market but you find that some are already having challenges. We would have wanted experienced and seasoned farmers to continue with cotton farming but however for them to do that they must be rewarded for them to be motivated.”

Currently farmers are being paid US$0.32/kg and ZWL$32/kg in spot payments.

In 2020 they were being paid ZWL$0.94/ kg which was almost equivalent to US$1/kg.

Makombe also encouraged those who owed cotton farmers should pay them expediently and that the money should be adjusted to factor in the effects of inflation.

He said, “Given the situation, we are encouraging those who owe cotton farmers to expedite the payment. We are also encouraging them to look at the costs because that price from two years ago has been eroded. So in order to mitigate or improve on the lot of the farmers who have not been paid, when that money comes in they should also factor that amount that has been affected in last year and the one before that.

“If they are given that amount without some adjustments it will be a mockery because it doesn’t mean anything. So we are engaging those who owe farmers to also consider that if cotton farming and the cotton industry are going to be viable they should get real value of the money through their crop.”

Cotton Producers and Markets Association of Zimbabwe president Stewart Mubonderi told Business Times that delayed payments would not come without consequences to the cotton industry.

“The money being awarded has lost its value and farmers are not happy. Some of the reasons being given for late and delayed payments are because of an unavailability of accounts but that is not true. I have spoken to farmers who have accounts and even up to now they haven’t been paid. The consequences of this are side marketing, decline in production that will ultimately affect the economy of the state and livelihoods of farmers,” Mubonderi said.

He added that the idea of spot payment was very much welcome, as farmers would be able to be paid immediately upon submission of their cotton and would be able to buy inputs before the next farming season but the amount offered had to be adjusted for inflation.

“I think like what the Cotton Company of Zimbabwe (Cottco) has done, they made arrangements with their banks then they implemented spot payment. It’s a very noble idea. At least this time our farmers got 75%  and that’s a move in the right direction. We are also happy with its spot payment however, the RTGS component pegged at ZWL$32 per kg, within a week will be valueless due to inflation.

“Our worry now is that farmers have to prepare their land and buy their equipment and other things they need to finish but as long as there is spot paying, preparing won’t be a problem.”

 

The Zimbabwe Farmers’ Union president Abdul Nyathi told Business Times that the delays may affect the production in the next summer cropping season.

“The delay of payment of cotton farmers to had been relayed to the union by the Minister responsible meaning that the government had communicated the delay and it has been understood from that point.

“The government informed us that they are working flat out to see that in a very short space of time payment will be made. The concern is with them, they just didn’t want farmers to not have information about what is happening in government, because the Cottco issue is more of a government issue than that of private people.”

 

 

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