Farmers selling cotton at below minimum price
In search of fast cash, some cotton farmers are selling their crop at as low as K150 per kilogramme (kg) to unscrupulous traders, losing out on K260 that could have been realised if the crop was sold to recommended ginners.
Confirming the development, Cotton Farmers Association of Malawi president Dickson Gundani said vendors are taking advantage of the weak systems to exploit farmers, a situation that has left many farmers at the mercy of the traders.
Gundani, a Nsanje-based cotton farmer himself, said there is need for government to institute restrictions to tame the traders.
He said: “Some farmers are selling the crop at between K150 and K200 per kg and these vendors sell the same to ginners at K360 per kg.
“This is unfair because in the end, low returns will affect loan repayment by farmers as they were supposed to be deducted directly from the ginners after sales.”
Government, through the Cotton Council of Malawi, gave cotton seed loans amounting to K1 billion to the farmers.
Unlike the 2019/20 season, loans for this season were channelled through ginners who gave out partial loans with an upfront payment of either 60 percent or 50 percent of the total.
The remaining 40 percent was expected to be recovered during the marketing season where a deduction is directly done upon delivery of the seed cotton.
In its May 2021 Status of the 2020/21 Cotton Season Analysis, the African Institute of Corporate Citizenship (Aicc) observed that despite Chikwawa District through Mikalango and Dolo Extension Planning Areas (EPAs) accounting for about 60 percent of the total loan, there is laxity in efforts to collect the loan.
Four weeks since opening of the cotton market in April, some ginners have not erected proper structures to enable loan collection.
In an interview on Tuesday, Aicc chief executive officer Felix Lombe said their monitoring exercise conducted in Salima, Balaka, Mangochi and Chikwawa districts from May 7 to May 12 2021, revealed that for instance, farmers that have outstanding loans are selling their cotton to traders thereby evading loan repayment.
He said: “A typical example is in Dolo EPA where one buyer who is supposed to collect K16 million from farmers has only managed to collect K100 000.
“He said he won’t be able to recover even half of the loan looking at the progress and conduct of farmers.”
Lombe said there is need for Cotton Council of Malawi to engage local authorities such as police to deal with traders who are buying cotton illegally and at below the recommended price.
Despite the high potential of the cotton sector, it is currently operating at sub-optimal levels with low cotton output levels currently estimated at 20 103 metric tonnes (MT) in the 2020/21 growing season despite the national ginning capacity being in excess of 50 000 MT.
