Cotton farmers spin in misery as brokers make a killing

By MARK KAPCHANGA

From a distance, the cotton field appears to be a single patch of colour, extending to the horizon. It is only when you get closer that you notice the cotton bolls have regular and circular bore holes with some larvae feeding on them.

The heavy presence of faecal pellets outside the bore holes gives Tom Onyango, 48, a cotton farmer in Nyanza, mental pressure. Occasionally, the father of six would come across the highly demanded white boll, two to four inches in diameter with little blemish.

The single larva, he says, can damage between 30 to 40 bolls. This means he may not get enough income from the crop this year to pay for his children’s education. Onyango is not alone; several cotton farmers across the country are in tears.

At one time a money-spinner, the glory of cotton farming is fast fading. The sector has been left to small holder farms cutting production capacity. This is jeopardising Kenya’s ability to utilise the platform offered by Africa Growth and Opportunity Act (AGOA) to export locally manufactured apparel to American markets duty and quota free.

Unscrupulous middlemen have descended into this business making a killing as farmers suffer.

The problem is compounded with lack of credit facilities, heightened competition and falling world prices what is denying cotton farmers in Kenya their fair share of the income.

The brokers nick from the poor farmers through faulty weighing scales, delayed payments and price manipulations.  The miseries have been intensified by America’s move to subsidise its cotton farmers to the tune of Sh2.085 trillion ($24 Billion) over the past 10 years despite the World Trade Organisation terming it illegal.

These developments have cast a dark shadow in a sector that was once Kenya’s main foreign exchange earner and second largest employer after the civil service.

About two decades ago, the sector comprised 52 textiles mills and employed over 42,000 people. Since then, however, domestic spinning and weaving capacities have drastically reduced to only 15 main textile mills, which are under capacity.

Struggling sector

In 1985, Kenya produced 38,000 tonnes of seed cotton. Production declined to 14,000 tonnes a decade later. As at 2005, production stood at only 5,000 tonnes from 30,000 hectares, translating to one tonne per six-hectare piece of land.

Production appreciated by 4,800 tonnes a year later as the Cotton Amendment Bill of 2006, which led to the establishment of the Cotton Development Authority, took effect.

Former Trade Permanent Secretary Margaret Chemengich attributes the near-collapse of the industry to the structural adjacent programmes, trade liberalisation of the 1980s and 1990s, corruption and mismanagement at the defunct Cotton Board of Kenya.

Liberalisation ruined the vertically integrated system for input supply, extension services and seed cotton buying. This combined with falling world prices has resulted in thousands of cotton growers abandoning the cultivation of the crop.

Mwea Ginnery Chairman Junghae Wainaina says the Government must take a bold step and resurrect the struggling sector that has been left at the mercy of the disorderly Cotton Development Authority.

Critics say the outfit that was created during the Kibaki regime has failed to redeem the grandeur of cotton cultivation. Instead, it has concentrated on fixing prices, a move that has hampered production.

“Uganda and Tanzania have invested heavily in the cultivation of the crop. Sadly, in Kenya we are obsessed with creating bodies with no specific mission but for selfish reasons,” said Mr Wainaina.

Despite undergoing an era of aestivation during the Idi Amin administration, cotton today is cultivated in more than 150,000 hectares in Uganda. About 400,000 hectares are cultivated in Tanzania while Kenya is hardly 20,000 hectares — 330 hectares short of its full potential.

“Farmers cannot access affordable credit. Ginners are willing to play the financing function but Coda’s averseness to act as guarantor to farmers has slugged the process,” he said.

In 2011, for instance, Mwea Ginners financed farmers to the tune of Sh400 million. Out of the funded 5,000 hectares, cotton was only received from 500 hectares. Brokers picked the remaining.  This explains why even commercial banks are reluctant to fund cultivation of the crop, as they cannot profit from it. Cotton is a high-input crop. Pesticide account for up to 60 per cent of the input costs. As a result, Kenyan farmers make a loss of Sh3 per kilogramme of seed cotton produced. 

Tanzania appreciates that cotton is a high-input crop. Through ‘Contract Farming’, the Government subsidises pest control for farmers. The scheme forms direct links between farmers and ginneries.

New jobs

Apart from removing the agent from the process, the ginneries provide the farmers with fertilisers and seeds. Uganda has also adopted a similar model as Kenya struggles with a bureaucratic system that has left thousands of farmers in abject poverty.

But all seems not lost. The private sector is coming in to corroborate the Government’s efforts in resuscitating cotton.

“We have lined up concrete measures to revitalise this critical industrial crop. We are carrying out trainings all over the country as well as providing quality but affordable pesticides and herbicides,” said Bimal Kantaria, the Managing Director of Elgon Kenya. Mr Kantaria says that production will increase drastically in the next five years as farmers get to know how best to manage the crop.

Besides the provision of inputs, analysts say the Government should impose a levy on mitumba. The money collected will then be channelled directly to production of cotton.

According to the African Cotton and Textile Industries Federation, Kenya imports more than 30,000 containers of mitumba annually.

Assuming 70 per cent of the population buys mitumba and a levy of 10 per cent imposed. If an individual spends Sh3, 000 per year on mitumba, that means about Sh8.4 billion would be collected a year. “If these funds are managed at ginnery level and a revolving fund established, then production will go up as mitumba consumption narrows,” said Mr Wainaina.

Cabinet Secretary for Industrialisation Adan Mohamed said Government plans to facilitate creation of more than 500,000 new jobs in the textile sector in the next 24 months.

Speaking at the Export Processing Zones Complex in Athi River, he disclosed that his ministry will seek to address challenges affecting textile and clothing industry in the country.

The Ministry, Mohamed, said, is spearheading a raft of new measures aimed at boosting local textile production, curbing the threat of mitumba imports while addressing the hurdles hindering investments in the sector.

Former Industrialisation Assistant Minister Nderitu Mureithi argues that the move to reduce duty on imported second hand clothes is reversing the gains already made in reviving the cotton industry.

“By the time the time the move was made, the Government had invested over Sh10 billion in stimulating the value chain. Unfortunately, the cut in duty gave undue advantage to the importers of mitumba at the expense of local garment players,” he said.

promotes freedom

The Vision 2030 says cotton sector has a potential to benefit about eight million people.

James Shikwati, the Director of Inter Region Economic Network, a firm that promotes freedom of trade as the driving solution to poverty in Africa, says cotton can transform East Africa’s economy only if a regional policy is pursued.

“It has been unrewarding for Kenya, Uganda and Tanzania to develop national cotton policies especially with their small population. The regional approach would result to a steady production and demand,” he said.

Mr Shikwati observes that cotton farmers have invested heavily in the AGOA, the legislation that seeks to improve economic relations between the US and Africa. However, since the US textile market requires constant supply of cotton, it has been forced to source them in other regions due to East Africa’s irregular supplies.