Cotton growers have expressed hope for continued investment in the crop’s production following government’s commitment to ensure that Agricultural Development and Marketing Corporation (Admarc) buys the remaining cotton in custody of growers.
In the 2020/21 National Budget, Ministry of Finance authorised the State produce trader to borrow K22.2 billion from commercial banks for buying maize and cotton for commercial purposes.
Cotton Farmers Association president Dickson Gundani said in an interview yesterday that about 30 000 metric tonnes (MT) of cotton is still with farmers because of lack of markets as ginners withdrew due to Covid-19 which dampened prospects on international markets.
He said: “We are relieved that government has considered our plight to ensure that Admarc buys the remaining tonnes of cotton. This will help us to recoup our investment and energise us to prepare for the next growing season.
“Almost all farmers have loans to repay and if nothing was done to bail us out, we could have been in serious debt.”
Minister of Finance Felix Mlusu last week said the K22.2 billion guarantee to Admarc was meant to support Admarc’s commercial functions to ensure profitability and ability to repay the loan to CDH Investment Bank.
Agriculture experts have been calling for speedy investment in the cotton value-addition and processing initiatives to produce finished products for both local and international markets.
Agriculture expert Tamani Nkhono-Mvula said what has happened in the cotton value chain due to Covid-19 should be a lesson that not everything will be alright moving forward.
He said most of the cotton is produced for overseas markets such as China, but with the Covid-19 pandemic, the country should not only invest in production, but processing too.
Said Nkhono-Mvula: “We need to swiftly revamp the cotton manufacturing and processing industries such as the sleeping giant David Whitehead, among others, to manufacture cotton associated products.
“Low investment into industrial production is a huge risk for agricultural development and to the economy. If David Whitehead was operating like in the past, it could absorb all the cotton volumes that are lacking markets.”
He said currently, Malawi is paying dearly for exporting raw cotton and importing clothing and associated products from cotton when the country could have been reaping economic benefits.
Government invested K1 billion for cotton production in the 2019/20 National Budget and farmers were given loans for inputs from the amount.
Last year, cotton prices hit over K410 per kilogramme (kg) but this year government pegged grade A at K389 per kg and grade B at K310 per kg.
Cotton is one of the most important cash crops grown in Malawi and ranks fourth as a foreign exchange earner after tobacco, tea and sugar.
Malawi exports 100 percent of both lint it gins and cotton seed to Asia and South Africa, respectively.