In an interview with businessdigest, Mutenha said after consultations with farmer representative bodies, AMA reached an agreement on prices of cotton for the season.
The price review comes after cotton farmers last week said they would not sell their crop, fearing they would incur losses and fail to pay back loans borrowed to grow the crop.
According to AMA, Grade A cotton this season will sell at between 48 and 58 US cents a kg, compared to a high of 85 US cents per kg fetched last year.
Grade B cotton will sell at between 44 and 48 US cents while grade C and D will sell at a maximum of 43 US cents and 39 US cents a kg, respectively.
According to AMA, the decline in this year’s cotton prices is because of the oversupply of cotton in the international market where China, which is a major importer of the crop, said it would not buy because the 4 million metric tonnes already in its reserves.
“Last year we had good prices which encouraged global production of cotton to increase. Supply this year is far more than the demand, hence the decline in prices for the crop,” Mutenha said.
“Ginners this year will therefore face difficulties in disposing of their lint at attractive prices attributed to the global lint price crash. At the prevailing prices, lint is now being sold at prices below cost of production.”
Mutenha said Zimbabwe was only producing 102 000 metric tonnes of the crop against global figures of 27 million metric tonnes. He said because of the low contribution of Zimbabwe to global cotton production, the country was not in a position to influence any price changes to the crop.
The high prices last year were mainly driven by the huge demand from the Chinese market, a scenario which gradually eased, resulting in prices declining.
Cotton Company of Zimbabwe Limited corporate communications manager Veronica Kadandara, however, said the fact that China was not buying would not affect their export figures.
The company said it had alternative markets like South Africa and Belgium, adding the drop in prices would affect their business.
Most cotton cultivators in Zimbabwe have not yet begun picking the crop, though the bulk of the crop is ready for harvesting.