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Zimbabwe cotton contractors await repayment of US$ 19mn
04
Mar '13
Cotton contracting companies in Zimbabwe still await the repayment of the US$ 19 million of the US$ 42 million invested by them to enhance production, as several cotton farmers breached their contracts and side marketed their output to avoid repayment, according to a Herald Online report.
 
David Machingaidze, Chairman of the Cotton Ginners Association said cotton was cultivated on 480,000 hectares of area in the country during last season, and only two percent of this was free cotton, that is, it was grown without obtaining any finances from contracting companies.
 
However, the contractors are still awaiting recovery of US$ 19 million of the US$ 42 million extended to fund cotton production.
 
During last year, the financers recovered only 55 percent of the amount invested, which is the lowest rate so far, Mr. Machingaidze said.
 
While some farmers engaged in side marketing of their crops, some others sold their produce at lower prices, not sufficient enough to allow them to repay their loans, the Herald report stated. 
 
Cotton contractors mostly secure funds for financing through seasonal bank loans, and repayment breaches directly impact future lending, Mr. Machingaidze, who also serves as the Managing Director of Cottco, said.
 
Liquidity crisis has even thrown some of the contractors out of business and there were only 15 cotton contracting companies last year, compared to 25 firms about three years ago, Mr. Machingaidze said.
 

Fibre2fashion News Desk - India

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