Zimbabwe Cotton Conflict Awaits Resolution.

The problem started when cotton merchants reduced prices for cotton purchase from farmers to 30 US cents per kilo which farmers argue was too low, hence not viable, and threatened to withhold their cotton if the prices were not hiked.

Zimbabwe’s Cabinet Committee on Cotton met last week and discussed the contentious issue after farmers and merchants failed to agree on the right prices and expected to make a decision at the earliest.

The issue of cotton producer prices has become almost a perennial problem, which, coupled with economic instability of the past decade, has resulted in a sustained decline in the production of the white gold.

Cotton merchants have refused to submit to farmers' demands for higher prices arguing that cotton prices were also depressed on international markets.

Cotton is selling at just over US23 cents on international markets although prices may firm as demand from China rises.

A considerable proportion of Zimbabwe’s cotton growing farmers grew the crop under contract as most did not have the financial resources to purchase requisite inputs after a decade long economic instability.

This threatened future cotton production, which dropped from 333 000 tonnes in 2004 to 140 000 tonnes in 2005 weighed down by discouraging prices.

The introduction of the multi-currency system and stable macro-economic conditions saw confidence returning in the cotton industry last year with contractors targeting to invest over $30 million in the white gold.

It was also expected that output would top 248 000 tonnes this year from 226 000 tonnes achieved the prior year and would bring in US$100 million in export proceeds.

It appeared the industry was on a recovery path, but poor prices by cotton merchants threatens to through the once viable industry into a deep abyss of viability constrains and might force many farmers to opt out of cotton production altogether.

The situation has prompted the country to announce that Government would rope in Chinese firms to buy cotton at better prices.

China has the biggest textile industry in the world and doubles as the number one producer, at three million tonnes each year, but still falls short of its national demand and has to import an additional 2 million tonnes.

Its textile industry has been booming supported by a huge population of about 1,2 billion people whose spending power has been rising over the last three decades during which China's economy grew at above 10 percent.

Expectations are that the signing of a cotton purchase agreement with China Textile Association Import and Export Company would raise cotton prices