Maravi

Kwacha’s gain to render agric exports non-viable

Kwacha’s gain to render agric exports non-viable
By Joan Chirwa
Thursday May 08, 2008 [04:00]

COTTON and other non-traditional agricultural exports will cease being viable in Zambia if the local currency appreciates further against foreign notes, Zambia Cotton Ginners Association (ZCGA) chairperson Nigel Seabrook has said. And the Cotton Association of Zambia (CAZ) has launched the Credit Management Database (CMD), a latest initiative aimed at building up the industry’s credit history among farmers.

During the launch of the CMD in Lusaka, Seabrook said the weakening dollar and the strong kwacha were a disastrous combination for the industry – affecting both the farmers and the ginners.

“This season, the industry again faces a difficult time. As we all know, cotton is an export crop with US dollar income flows and predominantly all costs in kwacha,” Seabrook said. “Should the situation continue with further kwacha appreciation and ongoing domestic inflation, then cotton, along with other non-traditional agricultural exports will no longer be viable in Zambia.”

Seabrook, who is also Dunavant Zambia Limited managing director, said the current situation in the cotton industry could drive many rural households deeper into poverty.

“This will have very serious implications on the country’s rural economy and could eliminate any opportunity that the country has to achieve its Millennium Development Goals in respect of the rural population,” Seabrook said. “The cotton industry plays a vital role in Zambia’s agricultural development and rural poverty alleviation.

Currently, about 200,000 smallholder farmers directly depend on cotton, making it by far their most important cash crop.”

Seabrook further said the Zambian cotton industry required genuine investments for its enhancement.

“This industry needs genuine investors who wish to expand cotton growing and not just exploit the existing, indeed currently shrinking, farmer base,” Seabrook said. “It is apparent that in the last two seasons, due to a number of reasons, those ginners who have pre-financed, have had poor input recoveries. If those ginners were to reduce their future pre-financing as a result of this, it would have a disastrous effect on national cotton plantings and could destroy the, already struggling, industry.”

And CAZ, with the assistance of the Zambia National Farmers Union (ZNFU), the government and USAID has launched Credit Management Database, whereby the industry would build up a history and type of credit reference bureau to identify not only the farmers with excellent loan repayments, but also those farmers with poor loan repayment histories.

Labels: COTTON, EXPORTS, KWACHA

posted by MrK @ 12:40 PM