African Institute tip Malawi to invest K3.5bn into cotton industry

African Institute of Corporate Citizenship (AICC) in Malawi has asked government to inject US$4.8 million (about K3.5 billion) into cotton farming to revive the industry which it says is at the verge of collapsing.

Lombe: Invest in cotton

Cotton production trend from 2003 to 2017

AICC Chief Executive Officer (CEO) Felix Lombe told  journalists on Wednesday in Mzuzu that Malawi’s cotton production has gone down from 100,000 metric tons in 2012 to around 15,000 in 2017.

He said the decline is worrisome because, among other crops, cotton remains one of the best forex earners that can replace tobacco.

“The cotton sector in Malawi is now collapsing. There is need for urgent intervention,” he said.

Lombe explained that many farmers cannot afford to buy farm inputs such as right chemicals to fight pests and diseases, a situation that has been forcing many of them out of cotton farming over the years.

He said the number of cotton farmers in the country has reduced from 300, 000 in 2011 to 150,000 in 2016.

Significant government injection towards cotton input supply was made in 2011/12 season when the administration of the late President Bingu wa Muntharika pumped in K1.6 billion (at 2011 constant prices) resulting in the 100,000 metric tons of cotton produced in the following year.

According to AICC, since then, there has not been any meaningful government support towards inputs.

“The decline has resulted in loss of foreign exchange in excess of US$60 million [over K45.5 billion] by government, shrinking of economic activities within the sector and reduction in employment levels.

“Furthermore, around 150,000 farmers remain underemployed whereas their annual earnings of $26 million [over K18.8 billion] is lost,” Lombe said.

He added that the sector was previously offering 15, 000 fulltime jobs to people but now it employs less than 300 people because most ginning and cotton value addition companies closed down as a result of low production.

“This low production has affected not only ginners but also seed crushers who have resorted to importing crude oil for refining and essentially exporting jobs and draining the much-needed forex.

“Additionally, there has been loss of business in allied industries like chemical and seed suppliers due to reduction in production levels of seed cotton. If nothing is done, the sector risks crashing beyond the current level,” he said.

As a way forward, Lombe said there is need for the country to work out on its input supply model to ensure that farmers have access to quality inputs.

“Government should inject $4.8 million which is barely less than K3.5 billion, a very small amount of money by government standards, to revive the sector,” he said.

He explained that the injected money can be run by a bank in form of a Fund Manager as a revolving fund for farmers.

“The bank is then going to lend out to farmers using its own resources but at a subsidized interest rate,” he said.

Lombe said another option is that government, through the Cotton Council and Cotton Development Fund, which is provided for in the Cotton Act, can manage the funds, the distribution of inputs and the recovery of loans.

“Of course, there are prerequisites that have to be in place like a much organised farmer group or body to ensure that the $4.8 million does not go into the drain,” he said.

 

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