Cotton producers will receive US$ 30 as partial payment in foreign currency for every 250 kg delivered to Cottco with the rest to be settled in local currency (ZWL) as part of government efforts to incentivize production of the crop.
This means that farmers will get US$ 0.12 per kg for every 250 kg bale of cotton with the rest paid in ZWL.
Government through its cotton parastatal -Cottco have been previously accused of giving cotton farmers a raw deal, due to late payments on deliveries and also in the local currency subjected to value erosion from the obtaining inflationary environment.
The company administers the Presidential Inputs Scheme, which started in 2015 meant to expand cotton production and also assist rural and vulnerable families.
“The Agricultural Marketing Authority (AMA) wishes to advise all stakeholders that further to the announced pre-planting producer prices for the 2021-22 agricultural cotton season, the Government has approved a dual payment system whereby USD30 shall be paid in foreign currency per 250kg bale delivered and the remainder in ZWL,” said the Agricultural Marketing Authority (AMA).
Last month government pegged pre-planting producer prices for cotton at ZWL$ 63.23/kg for cotton produced under Pfumvudza/Intwasa Scheme and ZWL$ 111.17 kg for cotton financed under non-governmental funded arrangements.
In USD terms, using the official exchange rate of ZWL$ 116/USD, the producer price of ZWL$ 111/kg translates to US$ 0.95 per kg or US$ 0.50 using the parallel market rate of ZWL$ 220/USD which remains very little.
Experts say the foreign currency incentive remains too little for cotton farmers given the fact that the economy has dollarized and price of goods and services continue to increase, even in USD terms.
Authorities have been struggling to buttress the local currency since its introduction in 2019 which has led to its rapid depreciation.