AICC in Malawi urge govt to make K3.5bn investment into cotton industry

Malawi’s cotton production has gone down from 100,000 metric tons in 2012 to around 15,000 in 2017, to revive the industry which it says is at the verge of collapsing, the African Institute of Corporate Citizenship (AICC) in Malawi has urged the government to make investment of US$4.8 million (about K3.5 billion) into cotton farming, said AICC Chief Executive Officer Felix Lombe on Wednesday in Mzuzu.

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

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.
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.

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.

The injected money can be run by a bank in form of a Fund Manager as a revolving fund for farmers. Another option is that government, through the Cotton Council and Cotton Development Fund, can manage the funds, the distribution of inputs and the recovery of loans.