The Cotton Ginners Association of Zimbabwe (CGAZ) has welcomed the Reserve Bank of Zimbabwe’s (RBZ) decision to provide $40 cash to seed cotton growers for each bale of cotton they deliver to the Cotton Company of Zimbabwe (Cottco).
BY TATIRA ZWINOIRA
At the weekend, RBZ announced that seed cotton growers would receive $40 in cash per bale they submitted and the remainder through either bank or mobile money transfers.
Cotton costs an average of $100 per bale.
CGAZ representative, Godfrey Buka yesterday said the new framework came into being after farmers complained they were not receiving payments on time.
“There is a limited access to cash and also it is in terms of wanting to include the sector into the banking system, which is the reason,” he explained.
“Essentially, there is no petty cash to use for purchasing the cotton, so the portion of the proceeds will be in cash and part of the money will be electronic transfers through bank deposits.
“It will be convenient to the farmer, because once the famer is used to banking their money, payments will be made into their bank account or maybe through platforms like EcoCash or Telecash.
“So once this is done, during the selling season, farmers will become familiar with such transactions and it will be convenient for people.”
Buka said RBZ’s intervention would also help seed cotton growers when the central bank paid them their 5% export incentive at the end of the season.
The latest industry prices show that on average, the price for A-grade cotton per kilogramme (kg) is 55 cents, B-grade 50 cents and D-Grade 47 cents, with the government expected to buy 98% of cotton by the end of this season.
On average, the price of 1kg of cotton is about 50 cents, with a bale weighing up to 260kg.
RBZ’s move to offer cotton growers part cash comes at a time seed cotton growers were becoming disillusioned as they were failing to access cash due to the liquidity crisis.
This resulted in some seed cotton growers engaging in side marketing in order to get cash.
In this regard, RBZ explained that they hoped the measure would ensure seed cotton growers received timeous payments and keep them from side marketing.
The country is expected to produce 110 000 tonnes of cotton, up from 32 000 last year.