A seed while growing makes no sound but while falling makes a huge noise. No other crop other then cotton during harvest generates so much noise, conflict, hope, dreams and excitement. Business soon shall be kicking alive in bushes with no roads and mobile networks. More skills and seasonal jobs near the cotton collection camps get explored. Young villagers receive both new football tips and new woolpacks for packing cotton fast. Rural noise gets amplified with squash carts, bicycles, motorcycles and trucks. Buyers come rolling down at each doorstep to pick up the committed and surplus cotton.
Farmers desperately need cash for their blocked needs while ginners immediately get the stocks. Competitive buying with cash for crop and credit inputs like chemicals and plantation seed allows the farmer to position cotton again in their crop mix future plans. Cotton termed indigenously as White Gold adds value to its shine by generating jobs, transforming livehood and ensuring cash in farmers` pockets. Government gains the valuable foreign currency revenues. Magic of intense competition at the doorstep often delivers the farmer more than the minimum price.
Language of domestic price is much easier to understand by a farmer hungry for justice and empowerment of his crop. Farmer blames ginners and buyers of ripping them off. Ginners while taking the future risk are convinced they are paying fair price to farmers. Blame game with love-hate and speculation continues.
Give and take cycle stands cool in the season as long as the forecasted price does not change. Stories of suspicion and fear in every season makes it essential for all stakeholders to understand how global prices are arrived at outside Zambia beyond the ginners- farmers control and without their consent and participation.
So while overseas price forecast of Cotton ginned Lint for next 50 days comes to Zambia with a touch of the internet button the lint fibre packed and loaded in the gins has to swim overseas from Zambia for weeks. Let us analyse a real time analysis on Tuesday April-2nd-2013.Internet gives two prices of lint one for that day as the real price and another speculative price for 47 days later. The average spot real price in US dollars per pound on this day is 83.29 cents. The forward shipment price available on this day on internet for 13th May-2013 was pegged higher at 88.46 cents per pound. To send an overseas shipment on this day exporter in Zambia has no choice but to use 13th May-2013 anticipated price of 88.46 cents per pound. This price is the current speculative benchmark used in all reverse calculations that includes the farmers price.
Cotton producing countries continue to invite all stake holders with an intention for minimizing the domestic noise on minimum support price. Intention is to reach on an agreement for price to be announced to the farmers. Agreed pricing formula indicates constant sharing of profit or loss for all domestic `takers` based on international price fluctuations.
In Zambia price mechanism activity of inviting all stakeholders views is done by Cotton Board of Zambia and this season it appears to be on 9thApril-13.
From Global to Local :
Seed cotton ginners, farmers and the governments world over, lock horns with similar price challenges. Rich countries like USA manages to keep their farmers happy and empowered on the land by dolling out huge subsidies which also breeds unequal playing field. Poor countries like Zambia and India are unable to provide `equal subsidy` inside and outside the market to cloth their humanity. At this critical juncture, conflict in interest forces a disconnect. Ginners under global price risk always refer to global lint prices in arriving at farmer prices while Ministry of Agriculture wants the farmers prices to be protected who are their valuable voters.
Bickering over prices is healthy activity which needs to be identified as a positive energy for Cotton inclusive growth provided it is regulated with information sharing transparency at ground zero. It should be clearly understood that unlike maize, cotton is not a `controlled product` in Zambia. For the continuation of the input support plan for cotton viability unity of all stakeholders is extremely important. In a bid to resolve the price acceptance with a win-win joy to all `price` should not get kicked like a football among all domestic stakeholders with the price fixer referee silently sitting outside Zambia.
Worst Take away for betterment :
The worst in cotton as observed during last season is over. Unions in SSA told farmers to wait and watch and hold on their stocks. Ginners were unable to pay the farmers more. Glut in the world market due to recession slowed down buyers for speculative reasons. Spinners went in Yes ! Yes ! No ! No ! mode displaying a fear while putting up a question, ”Why buy now- buy later at lower price” . Rest is history in Zambia. Global cotton lint price per pound crashed down from 150 cents to 72 cents. This downfall forced the farmers price to half from 3600 K per kilo in 2011 to 1600 K per kilo last year. Rage and anger was seen spilling on roads.
In spite of the last year hooting, noisy bickering, protest with some cotton burning in Zambia majority farmers decided to stick to cotton culture to ensure safe cash for crop at their door. Cotton season-2013 in Zambia is getting dressed up and shall definitely be a better one. The ICAC-International Cotton Advisory Committee with its 24×7 watch on market keeps the mill of hope alive. Less harvest worldwide and sad losses due to floods will finally end up in better price.
United stand on domestic prices among farmers and their ginners is the fast emerging need. United they shall stand tall and strong as collective takers of a better price. Divided they shall fall and loose.
Author worked as a Director in Zimbabwe, Mali in Grafax Cotton Pvt. Limited and is now in Zambia.
Rakesh Manchanda,
5,Mutankaclose,Roads Park,
Lusaka-Republic of Zambia.
Mobile:0978278371.
rakeshmanchanda 