By RAKESH MANCHANDA

A SEED while growing makes no sound but when falling makes noise. No other crop other than cotton during harvest generates so much conflict, hope, dreams and excitement. Business soon shall be kicking alive in bushes with no roads and mobile networks.

More skills and seasonal jobs in cotton collection camps are created. Young villagers receive both new tips and new woolpacks for packing cotton fast. Noise gets amplified with bicycles, motorcycles and trucks. Buyers come to doorsteps to pick up the committed and surplus cotton.

Farmers desperately need cash for their needs while ginners immediately get the stocks. Competitive buying with cash and credit inputs like chemicals and plantation seed allows the farmer to position themselves for future plans. Cotton termed indigenously as white gold adds value by generating jobs, transforming livelihood and ensuring cash in farmerΆs pockets. Government gains the valuable foreign currency revenues. The intense competition often gives farmers more than the minimum price.

The language of domestic price is not easier to understand by a farmer hungry for justice and empowerment from his crop. Farmers blame ginners and buyers of ripping them off. Ginners, while taking the future risk, are convinced they are paying fair prices to farmers. It is always a blame game with love and hate and speculation continues.

Stories of suspicion and fear in every season make it essential for all stakeholders to understand how global prices are arrived at outside Zambia beyond the ginnerΆs and farmerΆs control and without their consent and participation.

From overseas, the price forecast for cotton ginned lint for next 50 days comes to Zambia via internet. Lint fibre packed and loaded in the gins has to be shipped for weeks from Zambia. Let us analyse a real time situation. For instance, on Tuesday, April 2, 2013, the internet gave two prices of lint – one for that day as the real price and another speculative price for 47 days later.

The average spot real price in United States dollars per pound on this day was 83.29 cents. The forward shipment price available on that day was for May 13, 2013, which was pegged higher at 88.46 cents per pound.

To send an overseas shipment on this day, an exporter in Zambia has no choice but to use May 13, 2013 anticipated price of 88.46 cents per pound. This price is the current speculative benchmark used in all calculations that includes the farmerΆs price.

Agreed pricing formula indicates constant sharing of profits or losses for all domestic ΅takersΆ based on international price fluctuations.

In Zambia, the price mechanism activity of inviting all stakeholders is done by Cotton Board of Zambia.
From Global to Local:

Seed cotton ginners, farmers and the governments world over, lock horns with similar price challenges. Rich countries like USA manage to keep their farmers happy and empowered by dolling out huge subsidies, which breed an unequal playing field.

Poor countries like Zambia and India are unable to provide ΅equal subsidiesΆ to their farmers. At this critical juncture, conflict in interest causes a standoff. Ginners under global price risk always refer to global lint prices in arriving at farmer prices while the Ministry of Agriculture wants the farmerΆs prices to be protected.

Bickering over prices is a healthy activity which needs to be identified as a positive for cotton output growth provided it is regulated with information sharing transparency. It should be clearly understood that unlike maize, cotton is not a ΅controlled productΆ in Zambia.

It is important to continue the input support plan for cotton viability and the unity of all stakeholders is important. In a bid to resolve the price stand-off and reach a win-win situation instead of the price fixer silently sitting outside Zambia.

The worst in cotton marketing is over. Unions in sub-Sahara Africa told farmers to wait and watch and hold on to their stocks. Ginners were unable to pay the farmers more. There was a glut in the world market due to the recession which slowed down buyers for speculative reasons. Spinners went in putting up a question: “Why buy now when we can buy later at lower prices?”

The rest is history in Zambia. Global cotton lint price per pound crashed down from 150 cents to 72 cents. This downfall forced farmers to half their prices from K3,600 per kilo in 2011 to K1,600 per kilo last year. Rage and anger erupted.

The Cotton season-2013 in Zambia is almost starting up and shall be a better one. The International Cotton Advisory Committee with its 24 hours watch on market keeps hope alive. Less harvest worldwide and sad losses due to floods will finally lead to better prices.

The author worked as a director in Zimbabwe, Mali in Grafax Cotton Pvt Limited and is now in Zambia.