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Cotton farmers default K1.3bn loans

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As the country moves into the 2015-16 growing season, the Cotton Council of Malawi (CCM) has expressed its disappointment over failure by cotton farmers to repay K1.3 billion out of the K2 billion input loans from ginners.

This means the ginners have only managed to recover about K700, 000, representing a 37 percent recovery rate.

More than 80 percent of about 400,000 cotton farmers in districts where cotton is grown are said to have accessed the loans in question.

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Speaking during a press briefing in Blantyre on Thursday, CCM chairperson Patrick Khembo advised the farmers to pay back the loans describing the tendency as detrimental to the growth of the cotton industry in the country.

“Many farmers have an attitude of not paying the loans and these loans will not be written off and they will be carried over to the next growing season. Therefore, farmers are requested to pay back the loans,” Khembo said.

He said the council is trying to convince them to appreciate the importance of paying back the loans but most importantly they are relying on the media, traditional leaders and politicians to convince the farmers.

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He said, ginners will provide loans to farmers on contract arrangement and those who have not paid their last season’s loan are requested to pay.

However, Khembo said despite the hiccup, CCM remains optimistic that the cotton industry will be vibrant in the 2015-16 growing season.

“There is a lot of hope. There is a lot of excitement, in fact seed have already started being distributed and the uptake is quite high. We are expecting that there are a lot of farmers who will grow cotton this year,” he said.

On the cotton pricing which has been a source of concern among farmers in the country, Khembo said cotton pricing is always a very emotional topic.

“Clearly the farmers want to get the best prices as possible and equally those that are buying the crop would want to pay the price that will give them sufficient profits.

“But what usually happens and what we do in Malawi is that we get the farmers representatives and ginnery representatives for them to negotiate and find what would be a reasonable price that can be recommended. Once they have agreed, we as a regulator present our recommendations to government for them to set the minimum price,” Khembo said.

He then said the government will shortly announce minimum farm gate price for cotton with the aim of allowing farmers to make informed decision regarding the best crop combination during the upcoming season.

He said the Council strives to achieve increased cotton production and productivity, improved policy and regulatory mechanism for the cotton sector, improved trade and market accessibility, increased capacity of all cotton value chain players and increased value addition of cotton products.

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