The ninth cotton stakeholders meeting held here on Tuesday approved the
licensing of cotton buyers with outstanding debts to farmers and Cotton
Development Trust Fund (CDTF), a move some analysts have described as a blatant
abuse of the law.
Regulations under the cotton buying legislation prohibit the licensing
of cotton buyers with outstanding debts but heated debate ensued when the
government, through the Tanzania Cotton Board (TCB), announced its intention to
bar indebted buyers from participating in the coming crop buying season.
"We had already resolved the issue with the former Minister for
Agriculture, Food Security and Co-operatives that indebtedness should never be
the criteria for licensing," fumed one cotton buyer, who according to
sources is among the highly indebted trader.
The buyers and a group of some Members of Parliament teamed up to
vehemently defend their licensing in disregard of the law. The meeting finally
agreed to have all licence applicants allowed to buy the crop, but directed
that the debts be settled before the board issues the release order for export
of their consignments.
Earlier, during the hot debate, the Deputy Minister for Agriculture,
Food Security and Co-operatives, Mr Adam Malima said the meeting had only two
options - to repeal the legislation or compel buyers to pay their outstanding
debts within the prescribed period.
"If we want to help these buyers, we have either to repeal the law
or have the licence applicants settling their debts," Mr Malima said as he
read the sections of the law that prescribes the qualifications for getting
licence.
The proponents of the licensing of the indebted buyers argued that the
licence denial will weaken competition because only a few buyers will qualify,
subjecting the 14 million people that depend on cotton to face adverse economic
consequences.
Some cotton buying companies, mostly locals, reportedly refused to
contribute the 50m/- each to the CDTF from which they had taken pesticides for
distribution to the crop growers, despite reports that they sold on cash about
half of the pesticides.
The CDTF, which is embroiled in serious financial constraints due to
minimal collections from last season's cotton sales and failure by the
government to release over 6bn/- grant to support development, compelled the
fund to procure pesticides on credit and loan them to cotton buyers.
The 50m/- demand from each buyer was to be used in paying half of the
CDTF loan to suppliers of pesticides. However, default of the loan whose 50 per
cent had to be paid by January 2012, has subjected the fund to high interest
that accrues on the outstanding debt.
Meanwhile, the fate of this year's crop buying season remains bleak as
stakeholders failed to agree on the opening farm gate price. The meeting
postponed the discussions to next Monday when a team of cotton buyers, growers
and the regulator will deliberate and
agree on the price.
While producers have vowed never to sell their produce at the price
below 1,000/- per kilogramme, buyers have ruled out the likelihood of paying
above 500/- due to the prevailing prices in the world market.
Source: The Daily News,http://www.dailynews.co.tz , reported by Masato Masato
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