Wednesday, July 05, 2017

Zimbabwe: Cash Shortages Fuel Cotton Side Marketing
The prevailing cash shortages have given rise to massive side-marketing of cotton contracted by the Government with private buyers paying spot cash to entice farmers.

While the Government is entitled to buy the bulk of the crop after it invested $42 million into production, concerns have been raised that it may fail to recover its investment.

The Cotton Company of Zimbabwe, the Government agent in the cotton industry, is paying up to $200 on the spot and the remainder is being deposited into bank accounts or mobile accounts such as EcoCash. Private companies are paying prices slightly above 47c in cash, the base price the Government is paying for the lowest grade.

Recent visits to cotton farming areas showed that cash shortages had become the biggest weapon for side marketing amid calls for the Government to increase cash payouts.

"The private players are paying cash and farmers are tempted to side-market by selling the crop through farmers contracted by private companies," farmer representative Mr Ishmael Mutongozi of Sanyati said. "Some companies have taken advantage of that and it is a challenge."

Cottco area manager for Chiredzi Mr Munyaradzi Chikasha said side-marketing had become rampant and the situation was being worsened by cash shortages. He said despite their competitors paying slightly higher than the Government, they were also paying cash.

"Most of the farmers especially the older generation are not used to transacting using mobile platforms. They need cash. And even some young farmers prefer cash," he said.

While some farmers have embraced plastic money, businesses are taking advantage of the situation to overprice. In Muzarabani, some retailers have come up with a dual pricing structure -- one for cash and the other for mobile or electronic payments. "The prices when buying using EcoCash have become so ridiculous," said a farmer in Mushumbi Pools.

Cotton Producers and Marketers Association of Zimbabwe chairman Mr Stewart Mubonderi called on Government to investigate the source of private firms' hard cash.

"We all know that the country does not have enough money but these companies have a lot of cash," said Mr Mubonderi. "I think there is need for them to be investigated.

While Government has moved in to revive the cotton industry through a three year free input support programme, side-marketing remains a threat to the sustainable recovery of the sector.

The industry remains at a crossroads due to the rampant illegal purchase of contracted cotton by unscrupulous merchants. Last year, the Government financed the crop to the tune of $26 million but only a bought a third of 30 000 tonnes produced.

Cotton has been a source of livelihood for 200 000 families making it a strategic national priority.

Reprinted from the Zimbabwe Herald

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