Cotton subsidy this year

The Mozambican government announced on Thursday that it will no longer subsidise the price of raw cotton, paid to the producers. This reverses the policy for the 2020 cotton campaign when the government invested 240 million meticais (about four million US dollars, at current exchange rates) to maintain a minimum price of 25 meticais per kilo. Speaking at Netia, in Monapo district, in the northern province of Nampula, Agriculture Minister Celso Correia said the subsidy was no longer necessary because the cotton companies themselves have guaranteed that they will pay the 25 meticais a kilo minimum price during the current campaign.

“This year, because of the good performance, no price subsidy by the government will be necessary”, said the Minister.

He congratulated the representatives of the companies and of the cotton farmers for the consensus reached in the negotiations over this season’s minimum prices, mediated by the government. The farmers, through the National Forum of Cotton Producers (FONPA), had proposed maintaining the 25 meticais a kilo minimum price. The companies, organised in the Mozambican Cotton Association, wanted to reduce the price to 24.5 meticais a kilo, but government mediation led them to drop this proposal. Correia argued that it was because of the government subsidy in 2020 that annual cotton production rose from 30,000 to 52,000 tonnes, an increase of over 73 per cent. This, the Minister added, guaranteed an income to 150,000 peasant families. This success led to a near doubling of exports of cotton fibre, from 20 million to about 38 million dollars a year. The state expects revenue from cotton this year of 70 million meticais, compared with 21 million achieved in 2020. “Our commitment, as a government, is to continue stimulating the growth of this sector”, said Correia. He was optimistic that the minimum price would remain stable next year too, “protected against eventual exchange or market shocks”.