Cotton price deadlock
There is a heated standoff over price between farmers and the Zambia Cotton Ginners Association (ZCGA), which represents the main cotton buyers.
Negotiations between the ZCGA and the Zambia National Farmers Union (ZNFU) over the price for this season's crop broke down on May 15.
The ZNFU is reported to have been demanding a price of K4000 ($0.77) a kilogram, but the ginners are said to be offering only half that.
In a joint statement the two confirmed that they had reached a deadlock. "Negotiations on cotton producer prices for the 2011/12 season ... have reached a deadlock. They stalled following failure by the parties to agree on a price that would create a win-win situation," the statement said.
The deadlock was hardly surprising. The two had been on a collision course, with the ZNFU signalling early that it would not settle for anything less than a price that "reflected the true market position".
At the same time, reports were that the ZCGA was preparing to offer a lower price than last season.
ZNFU president Jervis Zimba served notice that the union would drive a hard bargain.
"We are aware that the buyers are pushing for a 50% reduction in price ... all district farmers associations must tell the farmers not to sell their cotton this year unless ZNFU is satisfied with the price," he said.
The ZNFU commodities committee chairman, Graham Rae, echoed that position: "I don't believe that the Zambian farmers are getting the true price for their product. We have advised the cotton association to liaise with us so that we can assist them to negotiate a price that reflects where the market is," he said.
The ZNFU has been consistently critical of crop marketing which pays farmers below true market value, especially as regards small-scale farmers driven to desperation.
It has the backing of the Cotton Association of Zambia (CAZ), which represents cotton farmers.
The CAZ rejected the price offered by the buyers and resolved not to sell cotton until a better price was offered. It expressed surprise that the ZCGA could offer a lower price than last year. The association said cotton farmers needed a reasonable income, but the ginners were bent on frustrating them by offering low prices.
For its part, the ZCGA insists that the world price of cotton has plummeted and its members are therefore unable to offer more.
The hardening attitude of the farmers is driven by the loss they believe they made last year.
The price of cotton on the international market measured on the Liverpool index shot to record highs last year and was well in excess of £150, which farmers believe should have translated into a better price than they received.
But farmers lost out because they entered into forward contracts, which were agreed to before the huge surge in the international price. The international price of cotton is no longer at those levels but farmers feel it is still trading at reasonable levels which should be reflected in the local price.
But the ginners are not about to give in. A meeting to break the impasse scheduled for May 18 was aborted and the same day the ZNFU announced that the ZCGA had "snubbed" the meeting.
Government has indicated that it will intervene. Agriculture Minister Emmanuel Chenda said on May 19 that the Cotton Board, a government agency, would mediate to end the stand-off.
It could well end. But the larger question, however, is how the whole question of agricultural marketing will be resolved. Current arrangements are fraught, especially for peasant and small-scale farmers, who are unable to bargain and hold on to their produce for any length of time.