STATE-RUN cotton dealer, Cottco, has said rising production costs and exchange rate volatilities, which have wreaked havoc on the economy, piled pressure on its margins.
Presenting an update for the second quarter which ended on September 30, 2021, company secretary Jacqueline Dube yesterday said they were not likely to benefit from rising international lint prices, which surpassed US100c/lb.
“The rising costs of local cotton production continue to put pressure on the company’s margins due to the various exchange rates prevalent on the market which are being used by some suppliers as a basis for costing,” she said.
The company also bemoaned the impact of side-marketing of the white gold.
“Prevalent side-marketing during the season which was further exacerbated by the shortage of wool packs resulted in Cottco’s market share declining by 2%,” Dube said.
“Authorities are committed to putting an end to side-marketing as reflected by the promulgation of SI (Statutory Instrument) 97 of 2021 and an increase in court convictions of perpetrators,” Dube said.
Cottco said it lost cotton worth US$2,5 million when an inferno broke out at its collection point at Checheche Growth Point in Chipinge earlier this month.
However, the tonnage lost was insured and investigations to establish the cause of the fire are ongoing.