Mozambique stops subsidizing cotton prices in current agricultural campaign

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Mozambique stops subsidizing cotton prices in current agricultural campaign

12:44 CAT | 02 Jun 2025

FILE - For illustration purposes only. [File photo: Lusa]

The Mozambican state will not subsidize cotton sales in the current agricultural campaign due to lack of funds, the Ministry of Agriculture announced on Saturday, after the meeting to set reference prices for 2025.

“The important thing is that an agreement was reached,” said Minister of Agriculture, Environment and Fisheries, Roberto Albino, quoted in a note from the ministry, about the approval by consensus, on Friday, of the minimum reference prices, together with the National Forum of Cotton Producers and the Cotton Association of Mozambique.

The new price list, according to the Ministry, sets the price at 22 meticais (€0.30) per kilogram for top-quality cotton from the 2024/2025 agricultural campaign and 15.5 meticais (€0.21) for second-quality cotton.

Mozambique represents less than 0.5% of global cotton production, in a market led by countries such as the United States, China and India.

In 2024, at the same annual meeting with producers, the Mozambican government announced that it would subsidize the purchase of cotton by five meticais (€0.07) per kilogram in that campaign, to stabilize prices for 600,000 farmers, in addition to encouraging a “culture of trust”.

For the 2023/24 campaign, a minimum price of 30 meticais (€0.41 euro) per kilogram had been set for the sale of cotton, including the subsidy to be granted by the Government, compared to 33 meticais (€0.46) and the subsidy of seven meticais (€0.10) in the previous campaign, when 37,400 tonnes were sold, with state subsidies of 261.6 million meticais (€3.6 million).

The lack of rain in some regions of the country due to the ‘El Niño’ meteorological phenomenon, the continued abandonment of production in the province of Cabo Delgado, one of the largest producers in the country, but above all the excess production on the market, have conditioned the price for 2024 downwards and led the government, for the second consecutive year, to set a subsidy to maintain producers’ income.

According to data provided to Lusa in 2024 by the president of the Mozambican Cotton Association (AAM), Francisco Ferreira dos Santos, cotton in Mozambique represented an annual average of US$30 to US$50 million (€28.7 to €48 million euros) in exports over the last 10 years, and is considered an essential crop: “It has an enormous value chain (…) it is an almost sacred crop, with catalytic effects on the economy and demographics.”

According to the current minister in charge, Roberto Albino, the executive will make available a line of credit with “extremely low” interest rates, with “a zero percent rate expected for those who are part of the agro-industrial value chain and wish to acquire agricultural equipment and inputs”, and up to 5% for the rest.

Cotton production in Mozambique grew by 2% in 2024 compared to the previous year, to 24,000 tonnes, but failed to meet the targets set for the sector, according to data from the Ministry of Finance on budget execution. Production of cotton, one of the country’s main crops, fell short of the 40,000 tonnes forecast, meeting only 60% of the target, although above the 23,516 tonnes of 2023.

In 2024, the cotton production area in Mozambique grew to 96,523 hectares, compared to 95,097 hectares in the previous year.

Cotton exports earned Mozambique US$7.6 million (€6.7 million) in the first half of 2024, a 71% drop compared to the same period in 2023, according to data from the Bank of Mozambique previously reported by Lusa.

“This behaviour is explained by the 4.5% drop in the average price of cotton fibre on the international market, in a context in which the exported volume increased by 36.2%”, said a statistical report from the central bank at the end of 2024.

Source: Lusa