Farmers get high cotton cotton prices

May 03, 2011

UGANDAN farmers can look forward to high returns as world commodity prices climb to historical highs on the back of a weakening dollar.

By BUSINESS TEAM

UGANDAN farmers can look forward to high returns as world commodity prices climb to historical highs on the back of a weakening dollar.

Arabica coffee prices are at a 34-year high, going for about $6.6 (sh15,510) per kilo, already pushing local prices to sh11,000 per kilo from sh9,000 in October.

Robusta farmgate prices have, however, slipped to sh1,500 per kilo from sh1,800 at the beginning of the harvest season in October, but still remain the highest prices farmers have seen since the 1970s.

Robusta coffee climbed to a 14-year high in New York amid concern that adverse weather in Brazil and Colombia, the biggest producers, will crimp output as a weaker dollar boosts demand for commodities as an alternative asset.

In London, robusta coffee figures for July delivery rose $27, or 1.1% to $2,563 a metric ton or $2.563 (sh6,025) a kilogramme.
“International prices are being pushed up by low supplies and increasing demand,” said Uganda Coffee Development Authority (UCDA) boss Henry Ngabirano.

“In the last 12 years, Ugandan farmers have been earning up to 70% of the world prices. We expect increasing global prices to be enjoyed by our farmers.”

Ngabirano, however, said poor weather and disease limited our export potential.

“We have missed our export target. Our target was 3.1 million bags, but we have only exported 2.7 million bags as at the end of March.”

“Middlemen are giving us a better price. Now we are getting sh4,550 per kilogramme of FAQ (Fairly Average Quality), up from sh4,200 in December,” said Gerald Jjakira, a coffee farmer and owner of the Kasambya Coffee Factory.
FAQ coffee is of a quality ready for export.

The increase in global commodity markets has been broadly attributed to a weakening dollar and to increased demand from China.

The dollar this week fell to its lowest level since July 2008 when measured against other international currencies, forcing investors to look to commodities such as oil and gold as stores of value.

This weakness helped propel US crude oil to a 2-1/2 year peak of $113.70 a barrel, while spot gold climbed to $1,532.91 an ounce.

For Adonia Degura, a progressive cotton farmer in Kasese, life has changed since commodities prices sharply went up. From 40-acres of cotton garden, he reaped over sh200m.

“I had good harvest coupled with good market prices of sh3,300 per kilogramme. My sweat paid heftly,” Degura said with joy.

“I bought a sh60m tractor on top of paying tuition for my secondary and university going children.”

Ferdinand Lusimbi, another cotton farmer in the same region, was lost in excitement.

“I have never seen such high prices in my life,” he explained.
“I used less than sh16m but after all the deduction, I was left with sh100m,”

Lusimbi has promised to triple his garden from 20 to 60 acres so that he takes advantage of high commodity prices.

“My advice is that you in towns should come back home because there is money to mint in addition to enough food to eat,” he said.

For Francis Kabaseke, a small holder farmer, who earned sh80m, he has built a permanent house and furnished it with quality furniture.

“I invite New Vision to come and see my new three plots of land and commercial building,” he said.
“The hoe does not lie though it calls for patience and perseverance,” he added.

According to the Cotton Development Organisation (CDO), cotton farmers have earned about sh132.2b, while cotton seed millers and ginners earned sh33.6b.

“This money has had positive impact on the farmers. The cash has helped them buy food, pay their children’s school fees and domestic needs,” said Jolly Sabune, the CDO chief.

Sabune disclosed that despite being out of the season, production rose to 144,000 bales, up from 70,000 bales registered last year.
A bale weighs 185 kilogrammes.

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