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Martin Kadzere Harare Bureau
AGRO focused firm, Cargill has closed its local cotton business citing operational challenges. Cargill, which had more than 20,000 farmers under its cotton contract scheme countrywide, said it had significantly suffered from low cotton output, depressed margins as well as high levels of breach of contractual obligations by cotton growers.

“Cargill will no longer participate in Zimbabwe’s cotton sector. Our ginnery at Chegutu will cease operations and will be mothballed. In recent years Cargill has been affected by changes in the cotton sector driven by shrinking cotton crops that have resulted in over-capacity amongst ginners, shrinking margins, high levels of farmers’ credit defaults and side marketing (farmers selling to competitors and not honouring contracts)” Cargill corporate affairs manager Corinne Holtshausen said.

“These have impacted the company’s ability to operate profitably and resulted in substantial losses. It has become clear that we cannot continue to operate with our current model,’’ she said.

Zimbabwe’s cotton output is expected to increase to 190 million kilogrammes this year from 145 million kilogrammes achieved in 2013 due to good rains the last season.

The record production of 353 million kilogrammes achieved in the 1999/2000 season has been difficult to surpass due to activities of pseudo contractors who consistently promote side marketing.

While the production was almost matched in 2012, this was due to record high producer prices, which were about three times the normal average. As prices started declining, most farmers abandoned cotton for better “rewarding” crops like tobacco.

Holtshausen said Cargill will however, continue with grain trading activities while exploring ways to operate profitability in the agriculture sector in the country.

Cargill has been operating cotton ginneries in Zimbabwe since 1996 and employed 278 permanent workers. The company processed approximately 15 percent of Zimbabwe’s cotton. Cargill provided seed, crop inputs, financing and agricultural training to the farmers.