Fredson Chalira of Kasokeza Village, T/A Makhwira, Chikhwawa was a happy cotton farmer in 2011.
The ‘gold of the Shire Valley’, as cotton is popularly known, was selling at K200 (about 50 US cents) per kg and that, according to him, was a relatively better price.
Then the price tumbled to K97 (about 24 US cents) per kg last year. After considering quitting, as many others did, Chalira got back to his hoe last year.
This year, the gods appear to be smiling on him. The ‘gold’ is selling at an average price it sold in 2011, and, to him, that is encouraging. But is it?
Chalira, 49, grew up in a cotton growing family. His grandfather grew cotton, and so too, his father. He recalls that, as a young man, precisely in the late 80s and early 90s, cotton always brought handsome returns.
“My father was able, after every growing season, to meet most of the family demands. I had a small farm then which gave me handsome proceeds. I built a small house which I shared with my brothers,” he says.
With a few savings, Chalira got married in 1994. He was convinced that his family, with cotton proceeds, would not suffer. He was wrong.
“Basically, from 1997 to 2001, cotton has given me a pitiful life. And it is not just me. My father and a number of my peers—we just can’t get good prices. They keep tumbling—something quite unprecedented.
“It is as if somebody somewhere were machinating it,” he says.
Things got better in 2002, however.
“The attractive prices that year puzzled most of us. I managed to build a three bed-roomed house, well corrugated and ventilated,” he says.
The situation, he adds, did not last long. That nasty face of poor pricing emerged and established its hegemony. It remains in power to date.
“We are suffering. Each year, before going to the field, I ask myself, or sometimes discuss with my wife, the relevance of continuing with cotton. But there isn’t much in terms of alternatives,” he says.
Chalira’s story, which is a story of a number of cotton farmers in the country, unravels challenges that smallholder cotton farmers face in the country due to tenacious poor pricing of the crops on the market.
Dubbed the country’s fourth forex earner, cotton—according to a country report presented at the 65th International Cotton Advisory Committee Plenary Meeting in 2006 in Brazil—is one of the most important cash crops in the country.
But pricing has been the heart of the challenge with cotton farming.
Historically, from the mid-1960’s Agriculture Development and Marketing Corporation (Admarc) was the sole buyer of seed cotton. This was the period which Chalira considers a golden age of cotton farming.
But in 1994, with the change of government, the market was liberalised following the adoption of an Economic Structural Adjustment Programme with the World Bank.
Admarc scaled down its involvement and sold its ginneries. This led to the opening of two big cotton companies, namely Great Lakes Cotton Company and Clark Cotton Malawi Limited (now Cargill).
In the name of capitalism, the two small companies came in with the hope of increasing competition in the buying of seed cotton.
Surprisingly, the few large commercial farms that were growing the crop abandoned it due to its declining profitability. Today, it is only smallholder farmers such as Chalira who are growing the crop and hoping for the better.
Will the better days they are searching for ever come?
Michael Jana, a political economist, argues that leaving poor farmers to face the full weight of market forces is not the answer to challenges facing poor pricing in the country’s agricultural sector.
“The State should also strictly regulate the market because if the 2008 credit crunch is anything to go by, the market, if left to its own devices can be destructive.
“So, in a way, we still have a capitalist-led development, but with key involvement of the State,” he says.
Jana’s argument seems to agree with what president Bingu wa Mutharika consistently preached and practised during his rule.
“It is the practice in developed countries with big economies such as Japan, Germany and France to protect their farmers from exploitation, so why should my government not do the same to make sure that Malawian farmers reap from their sweat?” Mutharika would say.
But even when he tried to intervene in the markets through setting minimum prices, the results were short-lived, which begs the question: Are minimum prices worth it?
Vice-chairperson of Cotton Development Trust (CDT) Duncan Warren argues that price interventions in cotton can work if certain measures accompany it.
“Government can subsidise the prices. By this I mean, if government, for instance, sets up K200 as the minimum price and the buyers insists they will buy at K150 [about 37 US cents], government should provide the K50 [12 US cents] deficit to every farmer,” he says.
Warren, however, agrees that such a proposal is quite costly; as such, he proposes the idea of a price stabilisation fund.
“What should happen is that in a good year where prices fetch better, we should be able to save funds to cushion farmers in a bad year. For instance, in 2011, the price went as far as K200 against government set minimum prices of K75 [18 US cents].
“What can happen in such instances is that we sell the cotton at K200, but let every farmer get K100 [25 US cents], and then save the other K100 for bad years as a subsidy,” he says.
Warren is confident that price stabilisation can work in cotton because it has ever been implemented and successfully worked before in tobacco.
Perhaps, if well implemented, the price stabilisation mechanism can help make Chalira the happy farmer he was in the late 1980s and early 1990s.