The Cotton Ginners’ Board wants the Agricultural Development and Marketing Corporation (Admarc) to be part of its structure, saying the corporation’s parallel operations in cotton trading are not good for the development of the industry.
However, Admarc says it cannot join the board, describing it as “a cartel that is aimed at making the farmer poorer”.
Cotton Ginners Board vice board chairperson Spencer Zinyemba said it was not proper that all ginners in the country are part of the board, except for Admarc.
He was speaking during a private sector interface meeting on the Buy Malawi Strategy with the Ministry of Industry, Trade and Tourism.
“Admarc is working outside the cotton board contrary to our agreement that all ginners should work under one board and this has resulted in other companies failing to compete,” said Zinyemba.
He said for instance that last season, Admarc kept adjusting their buying prices upwards which other buyers could not match.
“To them, profits do not matter. But we are in business and we need to make profits at the end of the day,” said Zinyemba.
Zinyemba said most ginners had contracted growers but due to Admarc’s actions, the growers sold their cotton to Admarc, resulting into some ginners failing to recover loans provided to growers.
“We only managed to recover K700 million out of K2 billion in loans provided to growers,” disclosed Zinyemba.
“This year, we have also given out the loans and if Admarc continues to operate outside the board, we are likely not going to recover our money from the growers,” he said.
He said it was challenges posed to the sector like the behavior of Admarc that is causing a reduction in the cotton production in Malawi which, he said, has gone down to just 20,000 tonnes from 100,000 tonnes a few years ago.
The number of ginning companies has also gone down from 11 to seven.
“This shows that things are not moving in the right direction. Our appeal to the government is that we need more incentives within the industry,” said Zinyemba.
Admarc chief executive officer, Foster Mlumbe, defended the parastals’s parallel operations, saying it is meant to protect the interests of the farmers.
“Our interest is with the farmer not the ginners. We want to see the farmer happy and reaping the fruits of his sweat,” said Mlumbe.
Minister of Industry, Trade and Tourism, Joseph Mwanamvekha, said his ministry will engage Admarc on the matter to make sure that government is not seen to be distorting the market through Admarc.
“We would want to hear from them why they are working outside the board,” said Mwanamvekha, who also urged companies that rely on farmers for their raw materials to offer better prices to the farmer.