Eddie Cross's Website

Success followed by Failure

In 1962 I was assigned to the task of relocating some 30 000 families who had lived in the basin of what is now known as Kariba Dam - still the largest manmade lake in the world. I found myself in Gokwe surrounded by 8 million acres of State Land that was to be settled by these displaced people. Over the next three years we built roads, drilled boreholes and settled thousands of families who had lived along the Zambezi river for centuries.

Included in our tasks, was activities to introduce these families to their new way of life and one of the ideas we adopted was to grow cotton. Cotton had been grown in the past in this country but had failed under pressure from disease and insect damage. New technologies and crop varieties made it possible to control these hindrances to the growth of the crop and in the conditions that prevailed in the Gokwe District, the new crop thrived.

In 1967 the Cotton Marketing Board was established, and the first Ginneries imported to process the growing crop. Sanctions imposed by the UN in 1966 made marketing our tobacco crop difficult and commercial farmers took to cotton as an alternative, but the crop remained a favourite of the small scale farmers in the Tribal areas. By 1975 we were growing over 400 000 tonnes of seed cotton and were the second largest producer in Africa. Ginneries were established throughout the country and a substantial textile and clothing industry was established. Several hundred thousand small scale growers dominated the industry as Commercial farmers went back to less demanding crops and tobacco recovered.

After Independence, the Government decided to privatise the Dairy Marketing Board and the Cotton Marketing Board. Like the chaotic privatisation process in Russia after the collapse of the Soviet Union, the individuals who took over these huge organisations benefitted from their political connections.

For the first decade, the new private owners and Directors behaved themselves and the crop was maintained, and a number of new private investors entered the industry, Cottco remained the largest player but faced competition. This was not appreciated and in the next decade, the private sector players left the industry, leaving Cottco effectively as a monopoly.

I am not sure when it started, but the owners of the Company and their Directors and senior management, found that they could under invoice their exports and make the real margin abroad where they could bank the proceeds to their individual benefit. Like all such activity, the sponsors got greedy and gradually the margins taken abroad increased, and the viability of the Company and the industry began to depreciate.

The impact was slow in coming but as the company failed to pay their farmers properly and the conditions in agriculture deteriorated in the period of 2000 to 2008, the crop declined until it was about half what it had been at its peak. The theft continued and when the Second Republic was born the new President ordered a program called 'Command Agriculture' this was a godsend to the Directors of Cottco. The State provided every cotton grower with the basic needs to grow an acre of cotton. Hundreds of thousands of these small-scale farmers benefited. The cotton crop recovered briefly.

Then, when it became apparent that corruption in the system and the diversion of inputs to other purposes had basically failed in restoring production and was unsustainable (it left the largest bank in the country almost insolvent), the program was reduced in scale and the farmers were left to their own devices. Cottco was simply unable to pay their farmers properly because their Directors were syphoning off millions in the Far East and the industry collapsed.

In the past season, one of the worst in our history, only 13 000 tonnes of seed cotton was produced. In a note on social media, someone remarked that the industry supported 1,3 million people, employed 60 000 people in the value chain, and the input costs by Government and the private sector had been US$48 million, US$3.70 per kilogram. Its real market value would have been about 70 cents per kilogram. Catastrophe.

The rampant corruption in the industry was brought to the attention of Government three years ago. They put the company into administration and ordered a forensic audit. This has now been running since then and although there have been some arrests and prosecutions, none of the main culprits have been brought to book and no results of the audit have been made public. The only information I have gleaned is that the auditors have confirmed over US$72 million has been syphoned off by the Company.

If we assume that Cottco had managed to buy 200 000 tonnes of seed cotton in a reasonable year in the past decade, they would have produced 84 000 tonnes of lint and 116 000 tonnes of seed. At ruling lint prices of about US$2200 a tonne the lint would have realised US$185 million dollars, and the seed could have been sold on local markets for US$250 a tonne realising another US$29 million dollars. That is US$214 million or US$1.07 per kilogram of seed cotton. Cottco failed to pay their farmers even a third of that. Even considering ginning costs plus transport of US$12 cents per kilogram, this leaves US$190 million on the table. If they had paid their farmers what they promised of US$35 cents per kilogram, the margin would have been US$70 million, and Cottco still declared a loss.

When the Cotton Marketing Board had been operating, the Board was made up largely of farmers who had a stake in the industry. They took home their Board fees and some travel costs, but nothing else. They paid their farmers cash within 48 hours of delivery to a ginnery and at the end of the season, if they had a significant surplus because the producer price had been negotiated on a conservative basis, they paid out a supplementary payment to every farmer based on their deliveries.

The Board was built up by the Directors and all costs of capital and operating costs were met by the Board from trading. Government made little or no contribution. It was the farmers who financed the creation of the Board with is national network of Ginneries and its fancy Head Office in Harare. The farmers also established a National Training Centre outside Kadoma worth nearly US$10 million and over the road, financed a research station that produced new varieties and advised producers on how to deal with new threats. It was recognised as being world class.

The training Centre is still maintained by a Trust left by the farmers, but the Research facilities are largely defunct.

The potential of this industry is greater than our tobacco industry which has survived because it is supported by the private sector and managed properly. We could grow a million tonnes of cotton, generating a billion dollars a year and give 400 000 growers US$1 750 dollars on average. It is also an industry that can handle the vicissitudes of the weather and is grown in marginal regions where other crops fail. It is also a commodity that can generate more jobs than any other on a dollar-for-dollar basis.

Please can someone explain to me why this major failure of management has not been sorted out and the criminals involved brought to book?

Eddie Cross
Harare, 3rd August 2024