Cotton farmers can expect further delays to the Government support payments amid concern of continued loss of the Zimbabwean dollar value, which now trades at between $170 and $200 on the parallel market, Business Weekly can report.
While the official foreign currency exchange rate has largely remained stable since last year, businesses are pegging prices using black market rates. As such, further delays to support payments has led to massive erosion of the value of their money.
Farmers sponsored by the Government under the Presidential Cotton Inputs Scheme were promised the support price as an incentive, in addition to free inputs.
But no payments have been made even though the bulk of the crop has already been delivered. In fact, the Government is yet to settle outstanding payments for 2020.
The 2021 marketing season is almost coming to an end in most cotton growing regions.
The Government set the producer price for this season at $54 per kilogramme. Cottco, which is administering the cotton scheme is paying $34 per kilogramme plus US$10 for every bale (weighing 200 kg). The Government is supposed to pay $22.
The total value of the raw cotton delivered is $6,4 billion, according to latest official figures from the Government. Cottco has paid a total of $2,2 billion and nearly US$2,9 million. Regarding the 2020 outstanding payments, $569 million has been paid out to farmers, leaving a balance of $290 million.
The growing discontent among farmers over payments delays is, however, becoming a major threat to the industry that provides livelihoods to more 350 000 farmers in marginal areas.
“We are being unfairly treated because by the time we receive these payments, we won’t do anything meaningful. The money will be just worthless,” Munyaradzi Ticharwa, a frustrated 48-year old farmer in Sanyati District, about 200 kilometres west of Harare told Business Weekly.
“Are we ever going to smile?”
Rising cost of living
In past few months, prices of most goods and services went spiral, tracking the exchange rate of foreign currency on the black market and this has severely eroded buying power of many consumers. Since April when cotton selling season started, the average cost of living for an individual has risen by 20 percent to $6 350, according to the Zimbabwe National Statistics Agency.
But analysts believe this could be way above as the Zimbabwean dollar has weakened considerably on the parallel market in recent months. According to the Amalgamated Teachers Union of Zimbabwe, salaries of teachers have been eroded to less than 50 percent of the Total Consumption Poverty Line due the rise in cost of living.
Business are charging prices using black market rates of between $170 and $200, way above the $88,55 on the official market.
“This is the reality on the ground and by the time the cotton farmers get paid, they will not be able buy anything,” Carlos Tadya, an analyst with a local research firm told Business Weekly in an interview.
Cotton Producers and Marketers Association chairman Steward Mubonderi warned the uptake of cotton production would affected this year due to the late payments.
“We are likely to get half the farmers we had last year,” said Mubonderi adding that cotton farmers “now feel discriminated.”
“What is the difference between a cotton farmer and a maize farmer,” he said.
Efforts to get a comment from Lands, Agriculture, Fisheries, Water and Rural Development Ministry proved fruitless.
The Government has so far $33,1 billion to maize farmers, living an outstanding balance of $1,96 million. Zimbabwe Farmers Union executive director Paul Zakariya said there was growing discontent among cotton farmers with some already moved to other crops.