The cotton sector was reformed in the mid-1990s when the very high international prices for cotton lint allowed ginners to pay attractive prices to farmers. This made cotton growing a highly profitable enterprise for both ginning companies and small farmers. However, the decline in prices from 1995 undermined this profitability as prices of seed cotton in Zambia fell from $0.56/kg in 1995 to $0.18/kg in 1999 and averaged US$0.225/kg in the past three harvest seasons of 2001/2003.
We have no doubt that farmers grew accustomed to several years of increasing prices and they did so with limited information on world market conditions. Thus they found it difficult to understand the reasons for decline in prices the ginning companies were giving them. This, together with lack of transparency in how each buyer determined his prices and how they deducted input costs, led farmers and their representatives to conclude that they were being exploited.
We note that this environment of lack of information created mistrust and in all likelihood led to the increasing rate at which farmers defaulted on their loans. It also led to their being involved in side selling of their yield to other firms and the loan repayment rate dropped from 86 per cent in 1996 to 65 per cent in 1999 and 2000.
In September 2004 Organisation Development and Community Management Trust (ODCMT) re-launched its programme to gather one million signatures in its campaign for fair cotton trade. From now on, the ODCMT will emphasize the issues listed below which it believes once achieved would improve the livelihood for small farmers. We wish to further emphasize that our campaign will culminate in the trade Week of April 2005.