An Assessment of the Growth Opportunities and Constraints in Zambia's Cotton Industry

Abstract

The main objective of this study was to assess the major opportunities and constraints in Zambia's cotton industry. The study found that the cotton sector has considerable potential to contribute to growth and employment in Zambia as it currently accounts for direct and indirect employment of approximately 21% of the population and about 19% of agricultural Gross Domestic Product. The prominence of smallholder farmers in the sector is indicative of the income equity promotion potential of the cotton sector. However, the highly concentrated structure of the sector, with two key players currently accounting for about 80% of the total market share in ginning; the absence of regulatory mechanisms for setting of prices; the openness of the local market to global price fluctuations and the lack of support programmes as compared to competing crops like maize are major impediments to equity promotion in the sector. Overall growth of the cotton sector is also constrained by low productivity arising mostly from poor farming practices. Furthermore, increased production in major world markets due to subsidies and use of bio-technology in cotton production undermine the competitiveness of Zambia's cotton in international markets. For Zambia to realize the potential of the cotton sector, interventions need to be targeted at raising farm level productivity. The government should also facilitate informed policy debate and development on critical issues such as biotechnology adoption as well as facilitating consensus between cotton buyers and farmers on price setting mechanisms.

The Use of Remotely Sensed Rainfall for Managing Drought Risk: A Case Study of Weather Index Insurance in Zambia

“…It is notable that around 2002, the Zambian Kwacha started to appreciate against the US Dollar, placing the export sector under increasing pressure. In response to the failing export market, in 2006, one of the largest cotton ginning companies, NWK-Agri-Services announced a 30% reduction in the price it would pay, resulting in a 40% drop in area planted during the 2007 season [43]. It is possible that price pressures or other socio-economic factors, rather than rainfall deficit, explain the magnitude of the fall in production during the 2006 and 2007 seasons.…”