A centralised cotton buying system has been introduced by Zimbabwean cotton merchants to curb side marketing which has become rampant. Farmers have described the move as an attempt to promote monopolistic tendencies. They say the new cotton buying system has taken away competition. The Cotton Ginners’ Association, which represents the merchants, is buying the crop on behalf of all ginners, and the volumes are shared on a pro rata basis depending on level of investment in the production.

About 98 per cent of production is funded by ginners under contract schemes introduced at a time when farmers were failing to access finance due to lack of collateral. While cotton production has been on the rise over the past few years, the viability of the sector has been adversely affected by side marketing. The challenges arise from a situation where some merchants were deliberately paying higher prices to lure cotton growers including those holding the contracted crop.

There is a feeling the cotton industry needs to have a model to achieve better efficiencies, viability and sustainability. Liberalization of marketing will not work if regulatory enforcement is weak. Market forces are great for freely produced crop but not when all production is under contract.