Cotton Farmers Get Shot in the Arm

THE Zambian Cotton Sub sector has been known to play an important role to the country’s economic development.

It is important in that it empowers the rural population through the creation of value chain clusters which in turn create job opportunities for local people.

The cotton industry in Zambia has developed into the country’s largest quasi-formal distribution network with some 200,000 smallholder farmers with an estimated one million dependants participating in various out grower schemes.

This important agricultural sector relies almost solely on input pre-financing schemes operated by out grower or ginning companies, who after pre-financing the farmers’ crop, buys the seed cotton produced and deducts the value of the pre-financed inputs from the money payable for the seed cotton.

The industry is primarily driven by the private sector that set prices and marketing arrangements and has almost exclusive access to policy discussions and formulation.

Previously, the farmers had not organised themselves into an effective grouping that could lobby and dialogue with government and out grower promoters.

Cotton is grown in more than 100 countries about 2.5 per cent of global arable land.

According to the Citizens Economic Empowerment Commission (CEEC) processing of cotton has shifted from developed to developing countries over the last decade.

Both world cotton production and consumption are trending higher, reaching a record in 2008-09 before the global economic crisis affected consumer demand.

The largest producers are China, India, the United States of America (USA) Parkistan and yield increases have led to an overall growth in global production although yields vary from place to place.

The survey reveals that the largest consumers importing cotton for processing are China, India, Parkistan and Turkey.

In Zambia, approximately 227,000 small landholder farmers produce 90 per cent to 95 per cent of all Zambian cotton utilising 254,000 hectares of land.

These cotton farmers also integrate crop production with staple food production such as maize.

The 2004 cotton production of 172,000 tonnes generated about US$50 million in export earnings of cotton products such as lint cotton, cotton yarn and ready- made cotton garments.

Besides the 227,000 farmers, 1,200 permanent employees, 1,700 temporary employees work in the cotton industry.

Where Dunavant and Clark Cotton companies have developed g out-grower programs for seed cotton farmers, yield has gonne up from 500 to 600 kilogrammes (Kg) per hectare in 2000 to 700 to 800 Kg per in 2001.

The Zambian climate and its general altitude of 750 square metres to 1,200 m creates an environment favourable for growing cotton.

Most of Zambia’s cotton is produced by smallholder farmers in the Eastern, Central and Southern Provinces, areas near Lusaka and the Northern Provinces and the Northern region of the Western Province .

Mumbwa District in Central Province has a potentially vibrant cotton sub sector with annual primary production of 23,383 tonnes of cotton and yields of 0.91 tonnes per hectare.

According to the Central Statistics Office (CSO), Zambia Popuplation and Demographic projections, Mumbwa District has a population of 254,465 people comprising of 126,875 male and 127,590 female.

There about 30,000 smallholder cotton farmers in Mumbwa with Kaindu, Nambala,Nalubanda, Shibuyunji, Kapyanga, Mukulaikwa, Mumbwa, Central and Nangoma agricultural blocs being the major cotton production areas.

The main value chain actors are smallholder cotton farmers, ginners, agro input suppliers and transporters.

Cotton is processed into seed, lint and fuz seed cake supplied to Cargil, Dunavant , Alliance, Continental and livestock farmers.

It is against this background that the Government is establishing economic clusters in various parts of the districts in the country.

These clusters are expected to capitalise on the district products and resources in order to support Small and Medium Enterprises (SMEs).

Such clusters will create the establishment of supportive infrastructure which will in turn, fuel the development of the district, the province and consequently, the country.

Last week, Commerce Trade and Industry Minister Bob Sichinga flagged off the 2013 value chain clusters in Mumbwa where he hailed the establishment of Mumbwa Farmers Ginning and Processing Association (MFGP) Company which will encourage more investments in local cotton production.

Mr Sichinga said the company will also encourage more cotton processing and job creation.

The project will also demystify cotton processing and export thereby encouraging more Zambians to invest in cotton processing and creating more job opportunities for local people.

There will also be greater circulation of cotton revenues within the district thereby boosting rural economy.

Mr Sichinga said the project marked the first investment in which the Commission would be taking equity of 32 per cent, a venture capital financing option duly authorised under Citizen Economic Empowerment (CEE) Act number nine of 2006.

The company would increase foreign exchange retention and reduce capital flight from the Zambian economy and that by earning through the farm-gate price and participating in marketing margins on unit, farmers will earn more their cotton.

MFGP which is the anchor investment of CEEC and supports cotton value chain, was established in Mumbwa at the cost of K5 million.

The company which was established in December, 2012, is anticipated to create not less 11, 000 jobs in the district.

Out of the K5 million, K2, 000,000 is CEEC direct loan and equity, while another K1,500,000 will come from CEEC again as trade finance while K1,500,000 was grant which came from the Ministry of Agriculture at the time.

MFGP managing director Danford Simujika said in its quest to find support, the company applied for financing to the Commission in the sum total of K2 million in equal shares of both debt and equity.

The funding was approved by the Commission and the whole loan amount of K1 million was disbursed in January, 2014 for the purposes of procuring cotton ginning equipment.

“Out of this support we have managed to buy ginning equipment. As I am speaking to you, the equipment has since been ordered from India and is expected to be installed by end of May 2014.

Among the equipment which has been procured is the presser which would be able to process 80 bells per hour.

This is in time to receive 3000 hectares of cotton crop from member farmers.

Shareholding in MFGP is as follows: CEEC 32 per cent, Cotton Association of Zambia (CAZ) 28 per cent, with the Zambia National Farmers Union (ZNFU) holding 25 per cent while MFGPCO holds 15 per cent.” Mr Simujika said

The company which is ready to gin seed cotton for farmers is currently supports 2,200 produce farmers.

“We want to avail an opportunity for farmers to earn money by selling two products namely lint and seed.” he said

The company is also ready to set trend in the cotton sector by giving them a fair producer price.

During the last farming season the company was able to offer K2.20 per Kilogramme (kg) while the major companies were offering farmers less than K2 per kg.

CEEC director general Likando Mukumbuta said the commission approved 19 projects in Mumbwa and disbursed more than K1.1 million with some of the projects approved being Sulisel Agro Suppliers and General Dealer, Walilanji Agro Marketing, Mulomel General Dealers, Nkausu Supplers, Mudenda Maureen, Kalaka Agro and General Dealers.

Others are Lismark Agro Dealers,Kabanje Agro Dealers, Fundiwa Ruth, Muzondiwe Jessily, Nyirenda Khumbo, Munengo Chrissy, Namukolos Creations, Chakaripper Youth Multipurpose, Shamulumba Agric Cooperative and Chileleko Womens’ Club among many others.

Mr Mukumbuta said that commission promised the people in Mumbwa that it will put people to work so that whatever they get from their fields and whatever they get from the other resources, they will be able to process themselves and that is what they would sale.

He said, “We told you that this is how we are going to bring wealth into the country and that is how we are going to develop the country through our own people. It is a pleasure because these value chains cluster are right under way and a total of K5 million has now been pumped into Mumbwa to commence the industrialisation of the district.”

Agro wise Agricultural Services applied for K220, 000 from the Commission which was approved and the company ventured into cotton seed.

The organisation also acquired a tractor, sprayer and a planter which where expected to provide services to farmers in the area.

The establishment of this organisation would help alleviate problems such as shortage of seed cotton most farmers have been faced with.

Farmers will increase income in that seed cotton would be within reach and would no longer have to depend on ginning companies for seed.

Christopher Chinyanta, a managing director at Ruth and Sons Enterprises Company Limited who has been in business for 10 years, said his company saw opportunity to venture into cotton seed production following a sensitisation programme with CEEC.

Mr Chinyangta said that the organisation then applied for K323, 000 loan which was approved by the Commission.

He appealed to fellow entrepreneurs who have not applied for CEEC funds to consider applying for funding as it was worth doing.

“Failure to apply for funding from the commissioner, they will lose out an opportunity to transform their lives.” Mr Chinyanta said.

Other entrepreneurs who have benefited from CEEC loans is Clement Njovu of Walilanji Agro Marketing and Kelvin Musa Ndolobaki of Chileleko Womens’ Club who both got K50, 000 each from the commisssion.

Mr Ndolobaki said that the project which is expected to benefit mainly youths and women would venture into production of cooking oil.

These value chain clusters are important because they present an opportunity to strengthen the position of smallholder producers and connect the industry to the market and assure the future of cotton in Zambia.

Source : The Times of Zambia

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