Reports from the world market that the price of cotton is not likely to stabilise any time soon owing to surplus production of the crop are disturbing, to say the least.
According to the Tanzania Cotton Board, global projected production of the crop for the coming season stands at 27 million tonnes. This comes to 4 millions more than current annual consumption, while the market already has 13 million tonnes in stock.
With such a scenario, going by current demand, factories would need no more than 10 million tonnes in the coming year. This means that next year the world could find itself having 17 million tonnes in stock, which would be roundabout 30 per cent higher than this year’s.
The problem is compounded by the fact that only 30 per cent of Tanzania’s cotton is sold internally. This means that the rest is left to compete in the dwindling global jackpot gamble between ‘purchase’ and ‘no purchase’.
With last year’s world market price standing at USD1.45 per kg, Tanzanian farmers sold their cotton at 1,100/- per kg. Suddenly and strangely, this year’s world market price has been set at a lowly US cents 0.83 per kg.
The situation in Tanzania appears a lot worse than outside there. Productivity is low, mainly thwarted by shortage of inputs like seeds, fertiliser, machinery and pesticides.
TCB says current demand for seeds is 15,000 tonnes but only 8,000 tonnes can be produced locally. As a result, about half of cotton farmers in the country have no option but to use inappropriate seeds.
Given the grim scenario, even if cotton were still to sell at 1,000/- per kg, a whole hectare under the crop would earn the hapless farmer no more than a paltry 300,000/-.
This shows that, while the problems facing the cotton industry have much to do with marketing, there is also the need to undertake intensive reorganisation in the sector.
The cotton industry once offered jobs to more than 14 million Tanzanians and played an arguably bigger role in supporting the country’s industrial base than most other agricultural crops.
In its heyday, it was the nucleus in the building of textile, edible oil, animal fodder and mattress industries. Cotton production in the country was in the 1970s an annual 80,000 tonnes, which was close to 1 per cent of global production.
Today, the reverse is the case. Not only have most textile and allied factories collapsed but importation of both new and second-hand clothes has dragged down local production to only 60,000 tonnes (0.3 percent of the global share).
What is thus needed is not only a matter of the government supporting the sector in terms of subsidy but, rather, a complete reorganisation of the entire sector to enable it to back the growth of other sectors.
That would mean doing whatever is humanly possible to lure the farmers back into serious cotton production but also, even more importantly, creating or finding bigger and more reliable local and foreign markets and enabling local industries cut into the importation of textiles by producing quality ones themselves.
The ball is in our court. Let’s strategise – and play on.