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Mozambique govt fixes minimum prices for cotton
18 May '12
2 min read
The minimum price a producer must get for first grade raw cotton for current year has been fixed by the Mozambique Government at 10.5 meticais per kg, while for second grade cotton it has been fixed at eight meticais per kg.
The prices for cotton have been fixed by the Government based on a proposal submitted to it after price negotiations were held between the National Forum of Cotton Producers (FONPA), representing the cotton farmers, and the Mozambique Cotton Association (AAM), which represents the cotton buying firms, in April this year.
The current year's prices, however, are almost 30 percent below the last year's prices, when the first grade cotton was priced at 15 meticais per kg and the second grade cotton was at 11.5 meticais per kg.
During negotiations, while FONPA sought that the prices be maintained at last year's levels, AAM stated it to be impossible in the face of sharp fall in world prices and appreciation in metical against the US dollar, a denominating currency for cotton exports.
Earlier though, AAM insisted that it is not possible for them to pay anything in excess of 9.75 meticais per kg for either category of cotton, but ultimately it consented to a price of 10.5 meticais per kg for first grade cotton.
Deputy Justice Minister Alberto Nkutumula blamed the fall in local producer price on fall in cotton prices in world markets. While cotton prices prevailed at historic levels of US$ 4,550 per ton last year, this year they have tumbled to around US$ 2,000 per ton.
With such a sharp fall in procurement price, it is feared that farmers may shun cotton cultivation and shift to other more rewarding crops, during next season.
The prices for cotton have been fixed by the Government based on a proposal submitted to it after price negotiations were held between the National Forum of Cotton Producers (FONPA), representing the cotton farmers, and the Mozambique Cotton Association (AAM), which represents the cotton buying firms, in April this year.
The current year's prices, however, are almost 30 percent below the last year's prices, when the first grade cotton was priced at 15 meticais per kg and the second grade cotton was at 11.5 meticais per kg.
During negotiations, while FONPA sought that the prices be maintained at last year's levels, AAM stated it to be impossible in the face of sharp fall in world prices and appreciation in metical against the US dollar, a denominating currency for cotton exports.
Earlier though, AAM insisted that it is not possible for them to pay anything in excess of 9.75 meticais per kg for either category of cotton, but ultimately it consented to a price of 10.5 meticais per kg for first grade cotton.
Deputy Justice Minister Alberto Nkutumula blamed the fall in local producer price on fall in cotton prices in world markets. While cotton prices prevailed at historic levels of US$ 4,550 per ton last year, this year they have tumbled to around US$ 2,000 per ton.
With such a sharp fall in procurement price, it is feared that farmers may shun cotton cultivation and shift to other more rewarding crops, during next season.
Fibre2fashion News Desk - India
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