Farmers holding seed cotton suffer loss

29 Jul '11

2 min read

Zimbabwean seed cotton growers holding their crops in expectation of a rise in the price towards end of the marketing season, as per the usual trend, are likely to lose out due to a slump in lint prices in the world market.

The lint prices in the international market have dropped to 97 US cents per pound from a high of 237 US cents per pound at the beginning of the marketing season in May.

Such a downfall in lint prices has had a negative impact on producer prices for seed cotton. Ginners are now paying only 40 US cents per kg instead of the earlier 85 US cents per kg to farmers.

Usually, farmers have a tendency to hold back a part of their crop in expectation of a rise in world lint prices, and simultaneously a rise in the producer prices.

However, as major players in the global market are holding on to massive stocks, lint prices have plummeted. Its effect is visible on farmers who have stocked the crop in the hope of an increase in lint price.

Nonetheless, experts say that the current price of 40 US cents per kg which the farmers are getting from the ginners is in accordance with the approved producer price formula.

When the lint prices rise, it accrues profit to both the farmers as well as ginners, but when the prices fall, as it has happened at present, its affect is severe on farmers as it leads to fall in the price of seed cotton.

Fortunately, the current drop in the lint prices has occurred when farmers in the country have already sold off around 95 percent of their produce, and hence it would affect only some farmers who have not yet sold off their produce.

According to the experts, it is necessary for the farmers to always pay attention to the call for selling their produce in time owing to volatility in the world market.

Fibre2fashion News Desk - India

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