GOVERNMENT will release about $26 million to procure cotton inputs this season as it moves to restore viability in the sector. Under the arrangement, Agritex has been tasked to identify farmers and to distribute the inputs, comprising planting seed, chemicals and fertilizers while Cottco will be responsible to buy the crop at the end of the season, signalling the return to old monopoly model.
"Some agreements have been reached with suppliers of inputs and everything is in order," said a source close to the developments. "Agritex is the distributor (of inputs) while Cottco is expected to come in during the marketing season.
Agritex will provide a database of farmers that would have received inputs to Cottco for buying purposes.
"However, Cottco will still be involved in production through provision of agronomic advice.
"This is being done in the context of restoring viability and bring order to cotton marketing."
While Government will become the dominant player, private merchants can still participate and will only buy the crop to the extent of money invested into production.
Before the liberalisation of the industry about two decades ago, Government was the dominant player in cotton marketing through the Cotton Marketing Board. Then, Zimbabwe was among the best in cotton quality at a global scale during the CMB era.
The CMB was privatised in 1994, under the Economic Structural Adjustment Program, which gave birth to Cotton Company of Zimbabwe, a private company working towards the development of the cotton sector in the country.
The liberalisation of the cotton industry also resulted in the entry of other private players. Sadly privatisation has proven to be a harvest of thorns for this strategic sector.
The challenges emanated from a situation where some merchants were deliberately paying higher prices to entice cotton growers including those holding contracted crop. As a result of side marketing, some merchants failed to recover their investments, resulting in sharp decline in the inputs package to cotton growers.
Cottco executive director Dr Douglas Ncube could not shed more light on the matter, but confirmed that Government had come up with a plan to finance production.
Last week, Agriculture, Mechanisation and Irrigation Development Minister, Dr Joseph Made said the Government would provide inputs to thousands of farming households.
He said the Government was targeting about 250 000 hectares. "We are going to fully fund our communal, A1 and even A2 farmers and we have already contracted Quton (seed company) to supply 5 000 tonnes of seed," said Dr Made in an interview. "As Government, we took a position that we cannot allow the sector to perish."
Meanwhile Government has issued stern warning to "fly by night" cotton merchants, who had over the past years, been involved in fanning side marketing. Dr Made said Government would not tolerate any form of "disorder" in the industry.
"We cannot continue to have that kind of situation . . . its killing our industry and I would like to warn those merchants" involved in unethical practices "that will see Government will take action".
He also expressed concern over partial funding of the crop by some merchants, saying this has resulted in poor yields. This in turn, caused defaults.
For the past few years, cotton farmers were almost entirely financed through contract farming as they lack the means to access funding from banks.
Consequently, the size of the cotton crop was a function of contractors' appetite for risk relative to the expected returns. However the uneven playing field where some merchants financed inputs while others only appeared at harvest time was a recipe for disaster in the industry.
Due to sustained losses, the major financiers in the sector either pulled out or scaled down on their inputs funding to the detriment of yield per grower. Cargill, which was one of the largest merchant pulled out last year citing side marketing and low yields.
It said it could continue to operate under the current model were farmers were not honouring their obligations.
