Seed cotton: Government approves subsidy that protects family sector – Watch

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Seed cotton: Government approves subsidy that protects family sector – Watch

2:51 CAT | 13 May 2020

File photo: Rádio Moçambique

The Ministry of Finance estimates that subsidies will cost around 240 million meticais (around 3,5 million US dollars at current exchange rates) for the entire 2019/2020 campaign

The Mozambican government yesterday set the price per kilogram of first quality seed cotton for the 2019-2020 marketing year at 25.00 meticais, with second-quality cotton at 18.00 meticais and the cost of ginning at a minimum of seven meticais per kilo (first quality).

The new prices come after negotiations between buyers and producers were marked by differences between the National Cotton Producers Forum (FONPA), which wanted the previous price of 23.30 meticais per kilo of first quality seed cotton maintained, and the Associação Algodoeira de Moçambique (AAM), backing a price 19.00 meticais per kilo.

Faced with this mismatch, the government decided to subsidise the difference, fixing the price at 25.00 meticais per kilogram. According to information obtained by ‘Notícias’, the subsidy to the price of cotton represents the implementation of the President of the Republic’s commitment to allocating 10% of the state budget to the agricultural sector.

The new cotton prices represent an increase over last year, when first and second quality cotton were sold at minimum prices of 23.30 meticais and 17.00 meticais, respectively.

The decision was announced at the end of the 16th Ordinary Session of the Council of Ministers yesterday by Minister of Agriculture and Rural Development Celso Correia, who said that the reference prices set would safeguard the sustainability of the family sector in cotton cultivation.

Cotton production generates between US$30 and US$50 million for Mozambique annually and involves about 250,000 families, which corresponds to 1.5 million people across the country.

“Negotiations to reach prices were tough, but the Government’s approach fits into the policy of protection and encouragement of family farmers and, above all, of strategic value chains,” Minister Correia said.

To make the production of the so-called “white gold” feasible, the government will subsidise the price of seed cotton to the producer by 6.00 meticais per kilo, with the Ministry of Finance estimating that subsidies will cost around 240 million meticais (around 3,5 million US dollars at current exchange rates) for the entire 2019/2020 campaign.

Despite the steady demand for cotton, families involved in growing this cash crop had been living below the poverty line in recent years, Correia said, a scenario crying out for reversal.

So, in parallel with the promotion of cotton, the Agriculture sector intends to stimulate crop rotation through the incentive of cash crops, such as soy, corn and sunflower.

“The introduction of these crops in rotating cycles will increase the income of families already involved in the cultivation of cotton,” the agriculture minister explained.

Cotton is Mozambique’s seventh-largest export product and an important source of revenue, Minister Correia said. Mozambique could produce between 40,000 and 50,000 tons in the 2019/2020 campaign, he added.