BY FIDELITY MHLANGA
A leading cotton producer has bemoaned delays in the issuance of export licenses, saying it was in danger of being slapped with penalties and cancellation of orders by foreign buyers.
Southern Cotton Company (SCC) MD Caos Nzenze told journalists during a tour of the firm’s facilities in Shamva on Friday that they had been waiting for an export permit for over a month.
Nzenze said the company now feared that it would lose US$750 000 if foreign buyers cancel their orders for lint if the export permit is not granted soon.
SCC exports lint to Mauritius, South Africa and Germany, among other markets.
“We have serious challenges in obtaining export permits,” Nzenze said.
“Ordinarily it should not take more than three days, but it’s now more than a month since we applied for the export license.
“We have quite a lot of lint ready for export. Every day we go to the Ministry of Industry we get stories. It’s shocking.”
He said the most frustrating bureaucracy was at the Industry ministry, whose mandate is to facilitate growth in exports.
“Our biggest delay is coming from the Ministry of Industry. That’s where we have experienced a huge challenge,” Nzenze added.
“We have a stock of 500 tonnes lint ready for export, the export permit is giving us migraine headaches.
“We been hit with penalties by our buyers for failing to deliver lint on time.
“We also have a risk that they will cancel the contracts. ”
He said they also feared the lint would be damaged by rains as some of their depots, especially in the Lowveld had limited storage facilities.
The export permits are issued on three month intervals.
Meanwhile, Nzenze said the cotton company’s operations were also being hampered by erratic electricity supplies.
“The issue of power is also affecting us quite badly. We are unable to meet our export targets. We should have finished ginning by end of September,” he added.
“We are having power for four to five hours. It has taken us a period of seven months in ginning seed cotton instead of three months.
“We have applied for a dedicated power supply line but to no avail.”
SCC has ginning facilities in Sanyati, Checheche, Chegutu and Tafuna in Shamva
Lint prices on the international market are pegged around US$1, 40 per kg. SCC, which runs a growers scheme across the country’s cotton growing areas is planning to begin adding value by producing cooking oil and stock feed next year.
“We run a growers scheme.. We buy the cotton after it ripens, We gin the cotton and export 70% of the lint,” Nzenze added.
“Statutorily 30 % is sold to local spinners for beneficiation. But local spinners have not been able to take the 30%.
“We have plans underway to benefitiate the lint to produce seed with cooking oil and stockfeed.”
SCC, which also has operations in Muzarabani, Murewa, Checheche, Rutenga, Chinhoyi, Gokwe and Centenary, is the second contractor in the country after Cottco.
It took a break from cotton contracting until 2017 and its market share now stands at 12%.
“Given that we have been out of the market for four years our figures are phenonmenal We grew our market share to 12%. We doing fairly well,” Nzenze said.
“We are targeting to grow our market share to 18% by next year.”
SCC’s seed cotton output in 2007 stood at 7000 tonnes before dipping to 5,500 tonnes in 2018 due to poor rains but is envisaged to rise to 25 000 tonnes next season.
It’s quite shocking how there is so much lint for export and yet local companies are failing to get lint to spin and yarn to use! Government needs to look into this – local should be FULLY supplied FIRST!