Empowering Zambian farmers through South-South cooperation

8 December 2011
ITC News

Cotton is one success of Zambia’s turn towards a market economy and offers a powerful tool for poverty reduction. Until recently, the industry had been dominated by the foreign-owned private sector that dictated prices and marketing arrangements for over 300,000 smallholder farmers in contract cotton production, with almost exclusive access to policy discussions and formulation.

Against this background, the Cotton Association of Zambia (CAZ) was established in July 2005 to represent the interests of all cotton farmers in Zambia. Since 2006, CAZ has been collaborating in ITC-organized South-South cooperation activities in China, India, Senegal and Turkey, as well as in market-related activities in textile-producing countries such as Bangladesh, China, India, Thailand, Turkey and Viet Nam.

Building on the linkages created by ITC, CAZ was able to change the cotton sector in a number of ways:

Farmer empowerment – Knowledge gained from farmer groups in China, India and Turkey, as well as in Africa, enabled CAZ to change the fundamental power structures whereby cotton farmers now have a greater say in critical issues affecting the industry, such as pricing and contract negotiations. Historically, smallholder farmers were told the cost of inputs and given a general indication of the seed-cotton prices, but ginners had a free hand to amend prices without redress. In fact, ginners used farmers to manage price risks as they were disorganized and isolated. Following the introduction of a new cotton pricing model developed together with ITC, farmers are now able to negotiate on almost level terms with the ginners. An independent evaluation by the Swedish Development Agency (SIDA) in 34 districts showed an increase of seed cotton prices by 40% in the past two seasons. This price increase was shown in real terms and related to the incomes generated by smallholder farmers. In total, approximately 270,000 cotton farmers have benefited from higher producer prices negotiated by CAZ.

Transparency and partnership along the value chain – Exposure and training brought producers and ginners together to learn from each other and, more importantly, to interact more regularly. The mistrust that existed between ginners and farmers is almost entirely wiped out and regular meetings to discuss pre-planting prices and producer prices are held.

Indigenizing and adding value to the cotton value chain – Experience in countries such as Turkey and India showed CAZ that farmers can add value to their cotton, and that they can run ginning operations successfully. This prompted CAZ, through the Zambia National Farmers’ Union (ZNFU), to identify district farmers associations to pilot farmer-owned ginneries in the country to counter the 100% foreign-dominated ginning sector. A feasibility study confirmed the sustainability in six districts. As a result, the Mumbwa Roller Ginning and Pressing Company has been established as a farmer-owned ginning company with shareholding of 60% by farmers, 20% by ZNFU and 20% by CAZ for the first three years. Then the farmers’ cooperative will become the sole owner. The ginning equipment was sourced from India through contacts made via ITC. Farmers are also seeking to invest in ginning and cooking oil extraction in order to increase their farm incomes.

Building partnerships with preferred buyers – CAZ is capitalizing on the knowledge gained during training and marketing activities in Asia and is actively developing contacts with preferred buyers in Asia. These buyers are willing to pay higher prices for cleaner cotton. Farmers are partnering with preferred buyers (i.e. spinning mills) to reduce cotton contamination. Farmers have also introduced approved cotton picking bags and are grading cotton at the farm, a practice successfully adopted in Senegal.

Managing farm inputs – For the coming season, the Mumbwa Farmers Cooperative will start sourcing its own inputs. The cooperatives and CAZ will use the business linkages created in Asia and have developed a new self-finance scheme to make farmers independent of ginning companies in the supply of fertilizer and chemicals on loan terms.

• Creating an institutional infrastructure that supports farmers – CAZ liaises with all cotton-related institutions in the country, such as the Cotton Development Trust (CDT), the Zambia Cotton Ginners Association, the Conservation Farming Unit and the Cotton Board of Zambia, and acts as a transmission belt for ITC’s assistance. As a result, CDT started a process of partnering with scientists in India to introduce Bt cotton research in Zambia. CDT also acquired a roller gin to process seeds on behalf of ginning companies and outgrower schemes.

Regional collaboration – Due to its international exposure and facilitated interchange with cotton stakeholders in Africa, CAZ was instrumental in forming a subregional collaboration agreement in the cotton sector among cotton stakeholders from Mozambique, Zambia, Zimbabwe and Malawi (MoZaZiMa).

As farmers rotate cotton with food crops, the capacity built among farmers will also enhance the production of crops such as maize or cereals and thus contributes to food security in the country.