Cotton production Zimbabwe - Cotton contractors are counting their loses after failing to recover US$19 million from the US$42 million they had invested to boost production. A number of cotton growers side marketed their crop in breach of contracts to pay back loans.
Cotton Ginners Association chairman Mr David Machingaidze said companies financed cotton production to the tune of US$42 million and to date US$19 million remains unpaid.
He said to stay afloat, ginners had to seek debt roll-over in most cases.
'At 55 percent recovery, last season was at its lowest mainly spurred by greed on the part of some growers as well as a naïve solution to viability challenges in some cases.
'The money largely comes from seasonal bank loans and has an impact on future lending,' Mr Machingaidze said.
Mr Machingaidze, who is also the managing director of Cottco, said some contractors had been pushed out of business due to liquidity problems.
'There were 14 contractors last year and this number has been consistent over the past three or so years.
'However, prior to that period, there were 25 contracting companies and half of them went out of business due to liquidity challenges.
' In the current season, there are 15 contracting companies,' Mr Machingaidze.
Last season buyers offered low prices which farmers described as unviable.
This resulted in some side marketing the crop to evade payments.
Other farmers sold at the low prices and still could not raise enough money to pay back loans.
This season some farmers had to produce the crop on their own to reduce dependence on contractors whom they accuse of ripping them off.
Mr Machingaidze said only two percent of the 480 000 hectares planted were free cotton.
Cotton Producers and Marketers Association of Zimbabwe national chairman, Mr Clemence Gondo said most farmers paid back their loans and were left with nothing.
He said the problem why cotton growers were failing to settle their debts was that contractors sold inputs at prohibitive costs eroding farmers' profits.
Most contractors bought the cotton at US30 cents per kilogramme despite a directive from Government to increase the price to US70 cents per kilogramme.
'The input prices are too high and at the same time the contractors pay low prices compared to other regional counterparts.
'The same companies also came for recovery and seized farmers assets,' he said.
Mr Gondo complained that the situation for most cotton growers was pathetic as some had their children dropping out of schools while others were failing to raise money to buy food.
'As an association we are discouraging farmers from producing the crop under contract as they will not be able to break even at the end of the season.
'The best way out is for Government to introduce subsidies on cotton and continue assisting farmers with seed,' he said.
Contract cotton growing arrangements contribute about 98 percent of the seed cotton production in Zimbabwe.
This system came into existence after farmers had failed to access finance from the banks and cotton ginners came in with contract arrangements.
The current crop shows potential production of around 300 000 tonnes, a preliminary estimate which is based on seed distributed to farmers has indicated.
By Elita Chikwati