Cotton woes: Four buyers exit the market

If you thought the K1.6 billion Cotton Development Fund (CDF) meant to assist cotton farmers with their inputs would turn around the cotton sector for  the better, well, think again.

According to Cotton Farmers Association of Malawi (Cofam) production of cotton this year has fallen to unimaginable levels due to the adverse weather conditions the country is experiencing as a result of the El-Nino phenomenon.

The development has even  forced some buyers to exit the market, as players have to offer  high prices to the grower to get hold of the best crop.

Last year at the start of the marketing season, eight buyers were competing on the market for the crop. But this year, when markets opened mid May, only four buyers namely the Agricultural Development and Marketing Corporation (Admarc), Cotton Ginners Africa Limited, Mapeto and Afrisan are on the market.

Cofam president George Nnesa said on Tuesday this year the minimum a buyer is offering to get hold of one kilogramme is K375.

“This market season is poor due to low production following adverse weather conditions.  As a result, there is less activity at the markets especially here in the South, which has since made some buyers to start closing shop,” he said.

Nnesa said cotton farmers especially those from the Southern Region have had their crop output drastically fallen as the region was worst affected by the drought as well as crop diseases and also because traders had started buying cotton from farmers before the market season was opened.

Nnesa said as a result, some markets in the Southern Region have closed earlier than expected as there is no cotton for buyers to buy.

The Cofam president said while efforts were made to encourage growers to replant, they were let down by lack of financial support to enable them to buy necessary farm inputs like chemicals and fertilisers.

Deputy director of crop development in the Ministry of Agriculture, Irrigation and Water Development Bartholomew Ngauma, while hailing this year’s competitive prices said the exit of other buyers does not worry government as they were pressing for lower minimum price.

“Other buyers declined to enter the market [this year] with the recommended minimum price of K375 and since we could not go below K375, they chose to exit the market.

“This means that if we were able to accommodate all the buyers, our farmers could be offered less than the K375 that we had as a minimum price. But, the competition is still there because we still have a good number of buyers on the market,” he said.

Ngauma said that this year’s cotton market season is expected to close next month [July] when all farmers will have completed selling their stock.

According to the second round crop estimates, Malawi tobacco output was expected to decline to between 20 000 to 25 000 metric tones (MT) due to poor weather, while cotton output this year, is pegged at around 40 000 MT.

For three years running, cotton production has been on the decline with the 2012/13 season, Malawi producing a record 100 000 MT before output fell to 45 000 MT in 2013/14 and around 50 000 last year.

When CDT was being launched, Malawi expected to double its cotton production to around 200 000 MT annually. It was also hoped that reduced cotton yields elsewhere could benefit Malawi as increased global demand was likely to push up the crop’s price on the local market.

Tobacco, tea, cotton and sugar are the most important crops for trade for Malawi. Agriculture produce brings in more than 80 percent of the country’s export earnings.