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Cotton ginners face legal threat for breach of contracts
Dec '10
Tanzania's cotton ginners have failed to fulfil their supply contracts with overseas buyers, due to which they are now facing threat of legal action from the Liverpool Cotton Association (LPA) tribunal, which serves as an arbitration centre for cotton traders across the world.

On one hand, the Tanzanian ginners are claiming that, they were not able to procure enough cotton to fulfil their supply contracts, and on the other, it is believed that some ginners rather diverted their sales to other highly paid contracts to gain from the commodity's record high prices.

Such deceitful companies are confronting the threat of severe penalty like a complete ban on trading, by the LCA tribunal.

Further, the cut-throat competition prevailing in the markets have caused the commodity prices to surge to Tsh1,200 that is $0.81 per kg. But then, most of the small farmers who already sold their crops at entry level price of Tsh600 ($0.4) per kg were not able to reap the benefits of this surge in the commodity price.

The Tanzanian government initiated a cotton and textile development programme, in 2008. The programme was intended to raise the cotton production from current 700,000 bales to 1.5 million bales by close of 2015.

Fibre2fashion News Desk - India

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