The 2016-2017 cotton growing season could be heading for trouble as seven of the eight ginners in the country have refused to give farm inputs to cotton farmers on credit.
The seven, including government-owned Agricultural Development and Marketing Corporation (Admarc), have taken the move because farmers still owe them K1.3 billion in loans from last growing season.
Cotton Ginners Board (CGB) chairperson Amos Chipungu, said in an interview on Monday, they gave out K2 billion loan in inputs to cotton farmers last year, but have only managed to recover K700 million.
“Our role is to buy and gin cotton not extending loans. Seed is available on cash basis only that we know most farmers are failing to buy inputs because of the hunger,” he said.
Chipungu said ginners have the capacity to invest in the industry by extending loans to farmers if proper rules and regulations governing the industry were instituted.
“In other countries, there is a code of conduct for fair trade where quotas are restricted to each company to buy according to how much it invested, but in Malawi no sensible person can do business in the cotton industry unless significant reforms are initiated,” he said.
Chipungu said cotton is an international commodity, but prices in Malawi have always been higher than international ones which cannot be justified on any rational economic basis.
Malawi Cotton Company (MCC), which is the largest single Chinese investment in Malawi, said cotton production has gone down from 100 000 metric tonnes (MT) in 2012 to 13 000MT in 2015/16 with prospects of even lower production in 2016/17 season.
MCC chief executive officer Shi Jingran said government should protect ginners’ investments through a policy that constrains ginners to buy according to inputs invested.
“We are the only ones extending inputs on credit because we know farmers are struggling to buy seed and if they don’t have seed, we will have nothing to buy although we are owed more money through unpaid credit,” he said.
But Cotton Council chairperson Patrick Khembo disputed there are weak rules and regulations governing the industry. n