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US$500m Chinese cotton deal for Zimbabwe

by Byo24News
08 Mar 2011 at 07:56hrs | Views
China and Zimbabwe have struck a US$500 million cotton production and export deal, officials said Monday. Under the agreement, China Development Bank will advance the funds to a Chinese firm, Sinotex to finance cotton production in Zimbabwe through its venture with a local company. The Zimbabwean company, Cotton Company of Zimbabwe, is the largest cotton buyer in the country and has an out-grower scheme supporting more than 200,000 farmers.
With the bank loan, Sinotex and the Cotton Company of Zimbabwe hope to increase the out-grower scheme by 100,000 new farmers, and expand technical and input support to the growers.
Under the deal, Sinotex will then buy the entire contracted cotton output from farmers, via the Cotton Company of Zimbabwe.
It is by far the biggest agricultural export deal Zimbabwe has clinched, and is expected to rival tobacco earnings, the country's top farm export earner.
The Chinese firm requires around 800,000 tonnes of cotton lint a year, six times more than Zimbabwe's current national output.
Officials said the deal, which also provides a ready market in addition to financing, will spur production in the country, which produces some of the finest cotton in the world.
A combination of lack of financing and market had weighed down Zimbabwe's cotton production in recent years, with farmers switching to tobacco which was better paying.
The agreement takes effect this year.

Source - Byo24News