Maravi

'Setting up minimum price for cotton prior to season not workable'

'Setting up minimum price for cotton prior to season not workable'
By Joan Chirwa
Thursday June 14, 2007 [04:00]

CARGILL Cotton Ginners Limited has said setting up of a minimum price for cotton prior to the season was not a workable proposition. In a statement, Cargill Cotton Limited, with operations in Eastern Province, indicated the price paid to the grower was normally higher than any minimum price guaranteed. It was reacting to suggestions by different stakeholders of the cotton industry that a guaranteed minimum price for cotton be set prior to each season. Dunavant Cotton Zambia Limited is the only ginning company that has been announcing pre-planting prices for cotton.

"There has been debate about setting a minimum price for cotton prior to the season. Cargill does not believe this is a workable proposition," it stated. "The price paid to the grower is normally higher than any minimum price guaranteed, making the minimum price redundant, and one only has to go back to 2006 to find a buyer in the cotton sector reneging - going back on - a minimum price.

"Cargill believes that the price paid for cotton will be subject to competition with the ginners paying the maximum that they are able to afford at the time."
Cargill has set this season's price for seed cotton at K1,120 per kilogramme, an increase of 32 per cent over last year.

Most of the ginning companies have this year pegged their prices at above K1,000, a slight increase from last year's offer of around K850 per kilogramme of seed cotton.
Cargill also stated that reduced input costs for the 2006-planting season by 28 per cent "made the company's input package cheaper than any other ginner."

It stated that the reduction in input costs was aimed at offsetting the impact of low global cotton prices on the incomes of small-scale Zambian farmers. "When taking into consideration the reduced input cost, Cargill calculates that the farmers will have enjoyed the largest increase in net revenue in comparison to other cotton farmers throughout the country," Cargill stated.

It also committed itself to addressing the issue of side selling which was currently fueling the underperformance of the cotton industry. The company hoped the government would pass the Cotton Bill, which could help protect ginners and farmers within a well-defined legal framework.

Labels: COTTON

posted by MrK @ 3:36 AM