HomeBusiness DigestCotton price 42% lower

Cotton price 42% lower

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.

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