Mozambic subsidizes cotton to stabilise prices, help farmers

The Mozambican government will subsidize the purchase of cotton by five meticais (about 7.9 cents) a kilogramme to crash prices and benefit 600,000 farmers.

Minister of Agriculture and Rural Development, Celso Correia, announced the subsidy during a meeting with producers, on Wednesday, in Maputo.

“The subsidy and price stabilisation will impact around 100,000 families, representing 600,000 people who will have their income stabilised,” Correia said.

Representatives of the National Cotton Producers Forum (FONPA) and the Cotton Association of Mozambique (AAM) attended the meeting.

“This is part of a platform negotiating proposals for the minimum price of seed cotton and the ginning fee. It is based on an approved calculation mechanism.”

For the 2023-2024 campaign, the minimum price is set at 30 meticais per kilogramme of cotton.

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This includes the government subsidy, compared to 33 meticais and a subsidy of seven meticais in the previous campaign.

Lack of rain, mainly due to the El Nino phenomenon, the continued abandonment of production in Cabo Delgado province and the excess production of cotton on the market have put downward pressure on prices, according to the minister.

“There is global pressure from countries with subsidies, which is driving down the price of cotton. We’re producing a lot of cotton; stocks are rising,” Correia said.

Mozambique accounts for less than 0.5 per cent of world cotton production, in a market led by countries like India, China and the United States.

Cotton in Mozambique has generated between $30 million and $50 million in annual exports over the last 10 years, according to data made available at the meeting. (Xinhua)