Cotton shortage kills firms, say producers

Dar es Salaam. Tanzania exports more than 70 per cent of its cotton, leaving local factories with a severe shortage of the raw material, stakeholders say.

Sadly, they say, the Tanzania Cotton Board (TCB) seems to have no solution for the problem. Moreover, ginners who opt to sell cotton in the country do so at the same price as that offered at the world market.

However, TCB says it cannot force ginners to sell cotton inside the country as they are free to sell it at places of their choice.

“I urge local buyers to offer good prices when purchasing cotton. The problem is that they demand cotton to be sold to them at a giveaway price. Ginners see selling to them as making losses unlike selling it at the world market,” notes the TCB director of Finance and Administration, Mr Gabriel Mwalo.

He says if local factories offer higher prices ginners could sell it locally as doing so reduces costs when transporting the raw material to the world market.

A report by a task force formed in June 2011 by the ministry of Industry and Trade in cooperation with Consolidated Holding Corporation has shown that Mbeya Textile Mills has stopped operations because it is unable to get cotton.

According to the report, the company is in a bad condition to the extent that most machines have been left to decay. The investor says production cannot continue without cotton.

However, according to Mr Mwalo, the country produces enough cotton which cannot all be consumed within the country.

“Even if all available plants operate at 100 per cent still they cannot consume all the cotton grown in the country,” Mr Mwalo told BusinessWeek.

A latest visit at the Tanzania-China Friendship Textile Company (Urafiki) established that the company has enough cotton to meet its raw material demand.

The company’s assistant deputy general manager and human resource manager, Mr Swai Mosses, speaks of cotton supply having been improved significantly, making it easy for the factory to obtain the raw material.

Between February and August 2011, the company stopped operating due to the lack of cotton.

Fifty-one per cent of Urafiki shares are owned by the Chinese government and the rest by the Tanzania government.

The closure of Urafiki saw more than 600 workers rendered jobless and more than the same number earning only 60 per cent of their salaries.

But Mr Mosses told this paper two weeks ago that the company was now operating well and that cotton could easily be sourced within the country. “I can’t disclose the amount of tonnes we have because by doing so our competitor may know our plans and stock.” A recent survey has shown that Urafiki’s products are among the most expensive in the market. The high cost of Urafiki products has made many people buy foreign kanga and vitenge which are cheaper, causing the country to lose a huge amount of the highly needed foreign exchange.

Currently, a pair of kanga is sold at up to Sh9,000, higher than imported kanga which are sold as low as Sh5,000. Mr Mosses criticises middlemen for raising prices. “We have restricted our agents to ensure that kangas are sold at Sh7,200, but the problem is that wholesalers sell them expensively and it is very difficult for us to control them.”

Currently Urafiki is employing 983.

In 2003, kanga produced by Urafiki was selling at Sh3,000, but currently the price has risen to Sh9,000, which is extremely high for many poor women.

However, TCB is working on increasing value chains in the sector and empowering farmers to process cotton themselves in a bid to increase their revenues.

“Getting market is not a headache to farmers. The biggest challenge is increasing value addition. We hope that under the new system, cotton growers will reap the fruits of value addition,” says Mr Mwalo, adding that ginners are the ones who enjoy the lion’s share of cotton profits because apart from fibres they also extract oil from cotton seeds.

“The ginners buy cotton seeds from farmers and they extract oil from cotton seeds and oilcake which they sell and obtain a lot of money compared with farmers. We are now working to empower farmers so that they can be able to process their cotton and benefit from selling cotton and its seeds.”

TCB has realised that the best way to empower farmers is to help them process cotton themselves.

Major buyers of Tanzania’s cotton include Indonesia, Thailand, India, China and Madagascar.

Last year the price of cotton per kilogramme, according to Mr Mwalo, was Sh750 while cotton seeds were sold at between Sh350 and Sh600 per kilogramme.

On contract farming, TCB has formed various associations in regions where the system is being implemented to simplify the process of obtaining loans and farm inputs.

Areas where contract farming is practised include Geita, Simiyu, Kahama and Sengerema. The board is issuing identification cards to farmers in Simiyu under the sponsorship of European Union. According to Mr Mwalo, 203,000 tonnes of cotton were produced last season. Production is projected to hit 250,000 tonnes in the next season. According to Mr Mosses, the price of a kilogramme of cotton ranges from $72 to $75. “There is a very slight difference between the price offered in the country and that at the world market.”

Simiyu cotton farmer Joseph Nyantare told The Citizen that the lack of extension officers is the biggest problem to obtaining enough harvest. “The problem is that there are no specific extension officers for cotton production.

I urge the government to provide us with cotton extension officers who can advise us on how to grow cotton for better harvests.” He said the lack of technical assistance from cotton experts made it difficult for farmers to obtain enough harvests.

Another challenge according to Mr Nyantare is dependence on rainfall.