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April 4, 2022

Malawian farmers under-utilizing Chinese-funded cotton gins

Cotton farming in Malawi is on the verge of ‘extinction’ despite numerous trade opportunities opening up for the crop on the Chinese market. By Draxon Maloya, participant in the Journalism Capacity Building Workshop in Malawi in 2021. First published in Maravi Post.

Chancy Chagoma Gondwe from Lupembe in Karonga District in northern Malawi has relied on cotton as a cash crop for the past five years harvesting an average of 70 bales every growing season.

He ventured into cotton farming expecting to improve his household’s economic status but the continued low prices being offered by the Agriculture Development and Marketing Corporation (ADMARC) which is the only cotton buyer in Karonga District as compared to what other buyers are offering for the crop in some cotton growing district in other regions of the country have continued to demotivate him.

Chagoma complained that it is not only confusing but very frustrating as well to be selling his cotton at MK240.00 ($0.30) per kilogram when the same quality cotton is fetching MK320.00 ($0.40) elsewhere within the country.

“Cotton farming is one of the hardest ventures because there are many expenses which are incurred. Unfortunately, the revenue I am realizing because of lack of reliable and competitive markets and better prices does not reflect on the investment I am putting in,” Gondwe said.

Gondwe’s predicament is being shared by many farmers in Karonga District and the rest of the country as far as cotton farming and production is concerned.

The Karonga Agricultural Development Division Crops Officer Enock Mzembe noted that in 2020/21 agricultural season the district produced 274 metric tonnes of cotton from 219 hectares down from 600 metric tonnes from 503 hectares record in the 2019/2020 season.

“Production of cotton has dropped by 54% due to price disincentive, farmers demand an average of MK500 ($0.60) per kilogram but the only cotton buyer here, ADMARC is buying at a minimum of MK320 ($0.40) per kilogram

Most farmers here have shifted from Cotton to Sesame production where the new crop is fetching better prices at MK770 ($0.90) per Kilogram this year from MK550 ($0.66) last year,” Mzembe said.

Malawi being an agrarian-based economy has periodically failed to have reliable markets for its smallholder framers despite available trade agreements with one of the biggest consumers of agricultural products, China, Millennium Farm Limited which will enable more than 64,000 farmers to take part in this year’s cotton farming after getting loans while being offered ready markets for the crop.

The government entered into trade agreements with Chinese investors to boost its fragile economy in the agricultural sector more especially the cotton industry which has the potential to improve people’s livelihoods.

But cotton farming is on the verge of ‘extinction’ despite numerous trade opportunities opening up for the crop on the Chinese market emanating from some regional trade protocols to which Malawi government is signatory and failure in value addition to compete with other cotton producing nations . 

Apart from the lack of reliable markets and better prices, perennial internal squabbles bordering on lack of transparency and accountability between the Cotton Farmers Association of Malawi (COFAM) and Cotton Council of Malawi (CCM) have for years deterred cotton production and consequently the under usage of the state of the art Chinese funded cotton ginneries dotted around the country.

Malawi produces on average 158,000 metric tonnes of cotton annually and a good percentage of the cotton sold to South Africa out of the total exports which is about 32% of the total production, according to the Malawi Investment and Trade Centre.

Despite Malawi highlighting cotton as a priority export crop in its National Export Strategy because of its potential to generate both foreign exchange and reduce poverty, unfortunately, its a troubling crop bedeviled with low prices, lack of competitive markets, and maladministration by organizations marginalizing the sector.

For the past seven years, production has been dismal further dropping by 85%. 

For instance, the China-Africa Textile Company reported that cotton growers were supplying only about 10,000 metric tonnes of cotton lint way below the demand which is 20,000 metric tonnes annually.

The state-owned Agriculture Development Marketing Corporation (ADMARC)’s ginneries throughout the country are gathering dust and its Chinese donated machines are depreciating into oblivion because there is very little or no cotton coming through since most farmers got frustrated considering the prices offered on the market hence ginneries waiting for cotton supplies for two or three farming seasons.

In 2009 the Malawi government called in the Chinese to ramp up cotton production, thus the China-Africa Cotton Development Ltd registered in Hong Kong and joint-ventured by China-Africa Development Fund, Qingdao Ruichang Cotton Industrial Co., Ltd and Qingdao Huifu Textile Co., Ltd, was born with a plan to invest about US$64.72 million.

Thus the China-Africa Cotton Development Ltd set up the Malawi Cotton Company Limited (MCC) to re-live the government’s dream in the revived cotton sector. 

Malawi Cotton Company Limited (MCC) is now making full use of hi-tech equipment aided by the favorable agricultural conditions to champion cotton seed breeding, distribution, planting, processing, marketing, oil processing and sales, cotton by-products sales as well as spinning and sales of low-grade cotton despite continued low volumes of cotton supplies made by the farmers.

Malawi called in the Chinese to revamp the cotton sector but uptake among Malawian farmers is dismal.

However, the conduct of COFAM and CCM has disillusioned many farmers and they are slowly abandoning the crop.

COFAM Vice Chairperson for Lupembe Extension Planning Area in Karonga District Dickens Kang’wale revealed that since 2017 officials from COFAM Secretariat and Cotton Council of Malawi have been deducting MK20 ($0.02) from farmers for every Kilogram of Cotton sold claiming its registration fees for each farmer.

The officials also claimed the money would also be used for the opening of bank accounts in which earnings from their cotton sales could be deposited but four years down the line nothing has materialized. No single bank account has been opened, Kang’wale said.

Responding to the farmer’s allegations, former COFAM president, George Mnesa admitted that the money collected from farmers never reached the Cotton Council of Malawi Secretariat and he pushed the blame to COFAM vice President, Sarai Nkhonjera.

But Nkhonjera shifted the monetary issue to the late Namwera who was CCM Secretary-General until his death, who led the Karonga team where farmers paid money meant to open bank accounts. 

Cotton farmer Anthony Mwalwanda, who has been growing cotton for three decades, recalled the days when cotton buying companies used to go directly to the farmers and compete for their produce but that is never the case of late with any of the cotton buying companies who are following the model set by ADMARC.

However, despite waiting for the farmers to bring their cotton to the ginners, most Chinese companies are offering better prices as compared to other buyers on the market, a development which has now contributed to some farmers reconsider venturing back into cotton farming this year considering the crop being a key livelihood enterprise for a considerable percentage of farmers in Malawi.  

Mwalwanda is upset that their nearest ginnery at Ngara is not functioning due to the low volumes of Cotton that Farmers have been bringing in for the past years having been frustrated by the prices offered by ADMARC, mainly if they compare with prices offered by some companies buying cotton in other districts where there are multiple cotton buyers.

“We used to make a lot of profits in the past from cotton, here at Lupembe Section, we have around 450 cotton farmers whose only cash crop is cotton and we are now suffering,” he said.

In contrast, Salima District Agriculture Development Officer, Selina Malaga concurred with Mwalwanda that indeed Chinese companies have been offering slightly a bit better prices as compared to what ADMARC is offering.

“Chinese companies were offering slightly above what ADMARC used to pay for the crop, for instance these other buyers were paying MK330.00 ($0.40) as compared to MK240.00 ($0.30) offered by the state owned corporation,” Malaga said.

This Chinese funded ginnery is slowly becoming a white elephant due to under-utilization.

An agriculture Expert on the cotton sector Tamani Nkhoma Mvula suggested the need for Malawi cotton to be properly processed considering the potential it has if it is to compete with cotton from other countries and fetch competitive prices.

“The Chinese cotton market is always there to buy cotton from Malawi but first we need to add value and we must export high-quality cotton and above all the volumes we produce should be encouraging and meet substantial production levels,” Mvula said. 

Despite cotton farming being almost on the verge of ‘extinction’ in the country, the case is very different in neighboring Tanzania and Zambia where other market players from Asian countries like India and China have played a crucial role in revamping the cotton industry to an extent of introducing irrigated cotton production to supplement the rain fed production while Malawi still has such plans in pipeline, this is also part of utilizing the African Continental Free Trade Partnership which was established to propel economic growth through trade for African Union member states. 

 Lilongwe University of Agriculture and Natural Resources Economist Horace Phiri said that crop prices in the country are volatile such that to sustain the better prices extra work on the market expansion is required. 

“Mostly demand and supply takes a toll on the sustainability of production and prices hence need for an aggressive search for external markets, local markets remain limited and rigid to expansion,” Phiri advised. 

During the commemoration of this year’s World Cotton Day held on 7 October in Blantyre the Public Relations Officer for the Ministry of Agriculture, Gracian Lungu disclosed that the government has allocated MK2 billion ($2.4 million) to the cotton industry for research and trials of new seeds that are disease resistant and mature fast. 

“We have placed measures to bring irrigation farming into cotton and this will help where rain-fed farming is not doing well and our target is to turn idle farms which were being held for tobacco into cotton farms which we believe will increase production and contribute to the economic growth,” Lungu said.

With the coming in of the China-Africa Cotton Development Limited in Malawi, the government also still hopes the ailing cotton industry may still be revamped.

Malawi’s recognition of China being a significant business partner and an economic force to reckon with in the 21st century was manifested in a keynote address during the People’s Republic of China’s commemoration of its 72nd Foundation Day that was held in September 2021 when Foreign Minister Eisenhower Mkaka expressed admiration to the development trajectory of the PRC that has enabled the country in helping to transform livelihoods for over 100 million people from extreme poverty in developing countries in Sub-Sahara Africa and Asian regions.

In a ray of hope, the Cotton Council of Malawi (CCM) through its Special Campaign, Cotton Production Enhancement (Scope) Project reckons that Malawi can produce more than 100,000MT of seed cotton through the creation of a conducive production and marketing environments. 

“The critical challenge affecting the cotton sector in the recent years is low seed cotton production since 2011 when production reached 100,000MT after government supported the sector with an input fund, production has been going down up to a level of 6,000MT in 2017,” CCM says.

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