THE Reserve Bank of Zimbabwe (RBZ) has reviewed the foreign currency retention threshold for the 2023 cotton marketing season to 85 percent.
Cotton farmers were retaining 75 per cent of their foreign currency earnings, with 25 percent being sold to the central bank at the auction rate.
Following the RBZ’s recent Monetary Policy Statement, the central bank advised the Agricultural Marketing Authority (AMA) of the new development.
“Following the Monetary Policy Statement issued on February 2, 2023, we write to inform you that with effect from the 2023 season, cotton growers shall be paid 85 percent of their sales in foreign currency. The remaining balance of 15 per cent shall be paid to the grower in local currency through bank transfers at the prevailing interbank market rate.
“Considering this measure, cotton merchants shall drawdown from offshore and sell 15 per cent of their proceeds to RBZ at the prevailing interbank rate. The foreign currency payment to cotton farmers shall be net of foreign currency loans accessed for the purpose of financing seed cotton production.”
AMA chief executive Mr Clever Isaya said the adjustment will incentivise cotton farming.
“The increase of the retention threshold to 85 per cent is a positive development and will motivate our farmers to produce more in terms of quantity and quality. As AMA, we welcome this development and the onus is now on farmers to do their part as Government has played its part,” Mr Isaya said.
Zimbabwe is expecting a bumper cotton harvest this year on the backdrop of good rains.
In December, Government announced introduction of grade-based prices to boost production of quality cotton after stakeholders raised a red flag over poor cotton seed.
The new producer prices for cotton are US46c for grade A, US43c for grade B, US41c for grade C and US40c/kg for grade D. – Sunday Mail
