COTTON producers say proposals have been submitted to the Ministry of Lands, Agriculture and Rural Resettlement for the introduction of an industry regulatory framework to block the advent of “fl
y by nights” who only appear when the buying season begins.
Major cotton producers, the Cotton Company of Zimbabwe (Cottco), Cargill and FSI Agricom, said “fly by nights” or short-term buyers, both local and foreign, do not invest in the production of the crop but appear when the buying season starts exposing those who had invested in the production and promotion of the crop.
Cottco said the regulatory framework, should ideally address quality standards and ensure they were upheld.
It should also provide adequate safeguards to those who would have invested in the production and promotion of the crop.
The proposed regulations would require all buyers to register before venturing into the industry but of major concern was protection of seed cotton grading standards to enhance quality standards, which form the core of the proposed framework.
“The cotton business is a foreign currency earning industry and for it to operate without set minimum standards is not practicable in the long run,” said Cottco managing director, Sylvester Nguni.
Major players said the regulatory framework would maintain grading systems that would encourage the production and promotion of the crop as well as protect Zimbabwe’s quality reputation.
The regulations would make it mandatory for buyers to meet local obligations and supplies and not earmark all the produce for the export market.
Formalizing the national arbitrator to monitor each cotton buyer was also a priority in the proposed regulations but the cotton producers said the legislation was not meant to restrict new entrants.
“The proposed legislation is not restrictive to ensure the continuation of the reputation of Zimbabwe cotton,” said Trevor Wicks Cottco marketing director.
Cargill said the three major cotton producers were concerned about the long-term aspect of the business unlike other companies that were only after foreign earnings derived from exporting the product.
“We consider the long-term aspect of the cotton industry and hence we came up with this draft legislation for consideration by the ministry,” a spokesman said.
The three producers said there was a potential threat to the companies’ pricing power and earnings base in the long run if the industry continued unregulated.
Cotton is a major foreign currency earner that attracts several entrants during the buying season who view the crop as the fastest way to hedge against the free falling Zimbabwe dollar.