Harare - Cotton Company of Zimbabwe (COTTCO) says owing to the late onset of the rains and erratic rainfall patterns, the expected cotton intake for the 2022 season has reduced to 85 600 tonnes compared to 116 000 tonnes in 2021.
In a trading update for the quarter ended 30 June 2021, the cotton intake officially commenced on 13 June 2022, about a month later than usual as the bulk of the crop was a late crop owing to the delay in the first rains.
“As of 13 July, intake stood at 34 497 tonnes, and intake is expected to peak in July and August 2022,” the Company said.
Cottco said the global economic disruption from the conflict in Ukraine has led to shortages of most commodities and thus increased demand for oil seeds including cotton seed. This led to oscillation of lint prices, rising to 158.19 c/lb in May 2022 before plunging to 105.13 c/lb.
The Company highlighted that for the current season, payment modalities have been put in place to improve farmer viability and ensure that farmer payments are made timeously.
“Cotton farmer subsidy funding from the government was availed in full on 8 July 2022 and considerable progress has been made in payments to farmers,” Cottco said.
The Company added, “Farmers have expressed general satisfaction with the current season’s payment modalities and Cottco anticipates an increase in the number of farmers for the 2022 planting season as it continues to roll out the Pfumvudza/Intwasa Programme, with the advantage that cotton is a drought tolerant crop.”
Cottco highlighted that ginning is set to commence on 18 July 2022 with lint output being prioritised to support local spinners.
The emphasis by government to ensure agricultural resuscitation as the continent battles to fight impacts of Ukraine conflicts and Covid-19 augurs well with the company’s long-term growth.
Government schemes have helped drive sales, and Cottco alluded that farmer subsidy funding from government was availed in full on 8 July 2022.
However, the impact of global supply-chain disruptions will sustain for a stretched period and this reduces resource allocation towards agriculture, and demand.
Meanwhile, the Company opened the 2021 Cotton Buying Season with a legacy debt of ZWL$3.3 billion due to high producer prices set in 2020 season.
Cottco was thus not liquid enough to fund the 2021 season and closed with an outstanding balance of ZWL$956 million after paying off ZWL$3 billion to farmers.
The balance is, however, expected to be fully settled in the currency season. Cottco said its insurers have paid US$1.3 million to date relating to the fire incident at Checheche, Chipinge South.
The Company also said outstanding 2016 and 2017 audits which were stalled have now been signed off and will be brought to current period.
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