Lack of markets to cost farmers K2.3 billion loss
An analysis of the 2019/20 cotton production and marketing season has shown that farmers still have six thousand metric tonnes of cotton, which would approximately translate into K2.3 billion loss at K389 per kilogram (kg).
Other than the primary loss from farmers, the study also points out that government will lose about $2.5 million (about K1.9 billion) towards export revenue.
The analysis by the African Institute of Corporate Citizenship (AICC) indicates that largely, the implication is that farmers who have not yet accessed the market may drop out from growing cotton all together in the preceding season.
Reads the report in part: “A rapid assessment indicates that farmers still remain with seed cotton without an option of a market. Cotton Council of Malawi estimates a total 6000mt still remaining with farmers.
“The most hit area is Karonga district, which has the largest share and the least hit is the Shire valley region, which had ginners buy almost all the cotton.
“The buyer of last resort is Admarc, which declared its intention to buy the remaining crop but has not commenced the process despite government allocating K22.2 billion to buy remaining produce”.
CCM executive director Cosmas Luwanda was yet to respond to the questionnaire but at the onset of the marketing season he confirmed the CCM had only licensed Admarc as the only company to buy seed cotton from farmers at K389/Kg.
Among the reasons for the unprecedented turn of events that CCM attributed towards the uncertainty of the cotton market both at the local and international level due to the emergence of the Corona Virus.
Last season CCM issued input loans, which were issued upon 50 percent upfront payment which benefited about 20 000 smallholder farmers.
The assessment show the sector is coming from a record low production of the 2018/19 which was around 10 000mt, the government’s Special Campaign for Cotton Production Enhancement (Scope) in 2019/20 season saw Treasury injecting one billion Kwacha.
However, the Scope initiative managed to revive cotton production where final production points to an increased production of 25 000Mt in the last season.
Cotton production has been able to increase, with yield also increasing to 1400Kg/Ha and it was expected that farmers would benefit from a total of K9.7Billion from cotton revenue while government was expected to gain $10Million from export revenue.
Karonga based farmer at Mpata Extension Planning Area, Mwamnyira Village Traditional Authority Kyungu Francis Thomas Mwampondera said in an interview on Monday that he is abandoning cotton farming due to the lack of markets.
He said: “I started cotton farming in 1977; all these years the crop has been rewarding but for the past two years, there has been no market. This year is the worst, no single buyer has come forward, I am starving with my family because we don’t have money”.
Mwampondera said he is now afraid creditors who will want their money back but I don’t have any.
Village Development Committee chairperson Alufeyo Msachi from Group Village Headman Mweninguwe faulted the CCM and the government for not helping farmers with market needs for cotton.
“We are in the dark, both the government and the Cotton Council are silent, they are doing nothing to assure us about markets. Cotton is our livelihood and nobody has sold cotton in Karonga; we are worst hit. Almost every farmer is considering quitting production,” he said.
Cotton Farmers Association of Malawi president Dickson Gundani said almost all farmers have loans to repay and if nothing is done to bail them out, they will be in serious debt which could affect the coming growing season.
In the 2020-21 national budget, government guaranteed Admarc to borrow K22.2 billion from commercial banks for maize and cotton purchases for commercial purposes.
