Small Tanzanian Cotton Growers Missing Out on Historically High Prices

Although the price of cotton in Tanzania continues to rise, peasant farmers are unable to take advantage of the windfall. The majority, forced to go without income since the previous year’s harvest, sold their current crop when the cotton-buying season began in June. Although industry experts cautioned growers to wait, the price at that time — US$0.40 per kg — was too attractive for most of them to resist. The price has since increased by 33 percent, but most growers have nothing left to sell. Only a few of the larger growers have any stocks remaining to sell at US$0.53 per kg, and ginners are largely unable to find any cotton even at that historically high price.

The intense competition is leading some people to take unethical, if not illegal, steps to procure whatever cotton they can. Stocks that had already been sold, but not yet delivered, at US$0.53 per kg are fetching offers as high as US$0.70 per kg from competitors.

One possible solution that has been proffered to enable peasants to hold their stocks until prices rise is the establishment of a warehouse receipt system. Under that arrangement, growers would be able to use their cotton as collateral for short-term loans that would get them through the post-harvest period and sell at a later date, when prices are more advantageous.