Cotton prices on the Malawi market are likely to jump over last year, the vice- chairperson of Cotton Development Trust (CDT) Duncan Warren has said.
“In 2012, seed cotton farm-gate prices were at K 100 per kilogramme during the cotton marketing season [April to June]. The prospects this year are that the price is likely to be in the range of K140-K150 per kg of seed cotton,” Warren said in an e-mailed response to a questionnaire.
He said the increase represents a 50 percent rise in price, but said this will largely be due to adjustments to the devaluation of the kwacha against the dollar rather than an increase in market value.
“The latest cost of production puts Malawi seed cotton at around K80 per kilogramme, representing 53 percent return on investment,” said Warren.
But experts have predicted a decline in cotton lint supply on the global market in 2013/14 season mainly due to the current low international cotton prices.
According to International Cotton Advisory Council (ICAC) reports of December 2012, cotton lint supply on the global market will decline in 2013 to 2014 by 11 percent to about 23.2 million tonnes.
Apart from the low international cotton prices, the supply will dwindle because of the build-up in stocks, particularly in China over the past three to four years.
In 2011/12 season, Malawi cotton production went up to an estimated 110 000 metric tonnes, according to figures sourced from the purchases made by ginners, indicating an increase from about 50 000 metric tonnes in the previous year.
In the same year, prices were also favourable for most of the farmers.
Warren attributed the good prices on the impact of the K1.6 billion fund allocated to the cotton sector in the 2011/12 budget.
“The windfall prices in the 2011 marketing season, when seed cotton prices went to a record high of K200 per kg, stimulated farmers to grow a larger crop with expectations that the price would be maintained,” he said.
Warren said as a result of the K1.6 billion fund, there was a cotton production campaign that resulted in the cotton area reaching an estimated 200 000 hectares and the number of growers increasing even in non-traditional cotton areas.
CDT has this year estimated the hectarage to be about 224 000 based on 3 342 metric tonnes cotton seed distributed and that the number of growers is not likely to be significantly more than the 60 000 growers that were recorded last year.
According to ICAC, global cotton production is likely to drop in the major producing countries such as USA, Pakistan and China.
Available figures indicate that cotton in Malawi is grown by about 200 000 farm families, mostly in the cotton growing areas of Nsanje, Chikhwawa, Balaka, Machinga, Phalombe, Blantyre, Mwanza, Neno and Karonga.