Buyers, farmers in cotton price dispute

Buyers and farmers are rocked in a minimum price dispute ahead of the opening of the cotton sales season this month.

Farmers are proposing K1 200 per kilogramme (kg) while buyers want the price to be pegged at K750 per kg.

Meanwhile, Cotton Council of Malawi, the crop’s regulatory body, has proposed that the price should be K900 per kg, which  Cotton Farmers Association of Malawi (Cofam) believes is too low.

Last week, Cofam met four cotton ginners, namely Afrisian Limited, Malawi Cotton Company, Masapa Cotton Company and Agricultural Development and Marketing Corporation (Admarc) to discuss the minimum prices ahead of the opening of the sales season.

However, the matter was not resolved.

In an interview on Wednesday, Cofam board chairperson Labson Zidana said the two sides could not agree as growers felt the K750 price ginners were offering is below the cost of production.

He said: “The price negotiations did not yield anything because farmers, after calculating the cost margin which is the difference between the sales and direct costs of production, thought the price should not be less than K1 200 per kg.

“We factored in devaluation-related cost implications as well as the current cost of living and for the farmers to get a return, there is need to consider a win-win.”

Zidana said they expect another round of talks which will also involve Cotton Council of Malawi officials.

He said among other factors to be considered is the high cost of seeds which farmers have to foot without any subsidy from government.

Said Zidana: “Cotton hybrid seeds are selling at K58 000 per kg, which is expensive to smallholder farmers.

“We have been lobbying authorities to consider subsidising the seed like they do with other crops, but nothing has happened.”

Cotton Council of Malawi spokesperson Prisca Jamali, in an interview on Wednesday, acknowledged the situation, but said the regulator intervened and recommended an intermediate price of K900 per kg.

“This price [K900 per kg], we believe, is fairer to both sides and we did a thorough market analysis and consultations before arriving at this. But this is just a minimum, as such, buyers could offer more than that based on market forces,” she said.

Admarc chief executive officer Daniel Makata declined to comment, saying the farm-gate prices are yet to be released by the Ministry of Agriculture and that the council’s price is just a recommendation.

In an interview, cotton expert Duncan Warren sympathised with the farmers, saying there is a lot to be done to make the cotton industry attractive because of high cost of farm inputs.

“It is important to offer better prices to farmers because currently those growing cotton incur huge costs mainly because of skyrocketing costs of hybrid seeds and BT cotton,” he said.

This year, the country is expected to produce about 10 000 metric tonnes (MT), which is one of the lowest output in recent year as the country has potential to produce 100 000MT Last year, cotton prices rose by 24 percent to K720 per kg from the minimum price of K580 per kg.