Cotton Firm in Side Marketing Storm

Local cotton firm, Southern Cotton, has been caught in a side marketing storm after it emerged the company is targeting the commodity contracted by the Government. The Government, through the Cotton Company of Zimbabwe sponsored nearly 400 000 farmers last year, a scheme it embarked on in 2015 to boost cotton production.

Known as the Presidential Free Inputs Scheme, the programme has seen production expanding to 142 000 tonnes last year from 28 000 tonnes in 2015, the lowest output in nearly two decades, according to official Government statistics.

Side marketing takes place when parties to the contract violate the agreement, either when a farmer chooses to sell to other merchants or when a company buys from farmers it has not contracted.

Zimbabwe’s cotton industry almost collapsed as a result of the practice as many companies, including Cargill, closed shop.

Side marketing resulted in poor recoveries of the crop and made it unsustainable for merchants to continue investing.

Investigations by The Herald Business last week showed that Southern Cotton was taking advantage of having not invested much into production, and is paying more than the State-gazetted price to entice farmers.

The Government pegged the cotton price at $1,95 per kg but Southern is understood to be paying $2,40.

It also emerged that farmers’ data base at buying points is in shambles, in a development industry players view as a loophole that is encouraging side marketing.

In some instances, some farmers contracted by Cottco are also appearing as having been sponsored by Southern Cotton. Further, it has also been established that Southern Cotton is facilitating the movement of cotton contracted by the Government to areas where farmers do not appear in registers of contracted farmers.

This enables farmers to sell to any buyer as the commodity would be considered a free a crop. The practice is quite prevalent in the Lowveld and Mashonaland East Province.

“Southern Cotton is doing all sorts of tricks to steal the crop contracted by the Government. They are even distributing their wool packs to Cottco farmers, which is a violation of the regulations,” said Taurai Muvengedzwa, a farmer in rural Chiredzi.

However, chief executive of Southern Cotton Mr Caos Nzenze in an interview denied the allegations, saying the company was only buying from the farmers it contracted.

“We have contracted quite a huge hectarage . . . about 42 000 (ha) and we are buying only from farmers we contracted. We are not targeting anyone’s crop,” said Mr Nzenze.

Cotton Producers and Marketers’ Association boss Mr Steward Mubonderi said his association would soon approach relevant authorities with the matter.

“What we established on the ground is that Southern Cotton is heavily involved in side marketing.

“We recently visited areas around Murehwa and Chiredzi last week and we are worried about what is happening. We are calling on AMA to ensure sanity prevails.

“We are not at war with Southern Cotton as we want to see more investment in the sector. But we are totally against side marketing.

“As the association, we have taken a position to engage the Parliamentary Portfolio Committee on Lands and Agriculture as we want to see sanity prevailing.

“We are encouraging investments from the private sector to complement Government’s efforts but this should be done in a way that promotes growth of the industry.”

Chief executive of AMA, Ms Nancy Zitsanza said she had not yet received such complaints.

“We have not yet received any reports from our officers,” she said.

“But in cases related to issues such as dual registration, we have a cross checking mechanism to avoid disputes.

“For instance, when inputs are disbursed, receipts are issued by contractors and farmers should be able to produce them in cases of disputes.”

Source : The Herald

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