Commission bosses consider cotton U-turn

The Competition and Tariff Commission (CTC) has been forced to reconsider its order prohibiting ginners from setting uniform input prices after growers complained that the new dispensation would diminish their bargaining power.
Officials at the commission confirmed receiving submissions from farmer representatives advocating for a review of the order.

It has been gathered that farmers’ unions want ginners to negotiate input prices with groupings instead of individual growers, fearing their members, most of whom lack price negotiating acumen, stand to lose.

The growers themselves were non-committal, but CTC officials said their directors were likely to meet early this week to revise the order.

“Farmers have said they want certain things in the order to be revised. However, the board of directors is yet to make a decision,” said an official, who preferred anonymity.

“The resolution can be made early next week (this week) since the cotton marketing season is fast approaching.”
In 2010, the Zimbabwe National Farmers’ Union (ZFNU) approached the commission with allegations of unfair business prices against the Cotton Ginners’ Association (CGA).

The union alleged that ginners had restricted the production and distribution of cotton and also colluded to provide limited resources at a uniform price to ultimately peg low crop selling prices.

The CTC subsequently issued an order barring the ginners’ association from setting uniform prices.
Part of the order reads: “That members of CGA forthwith cease and desist from engaging in the restrictive practice of setting uniform prices of seed cotton bought from cotton farmers;

“And that the members individually negotiate such prices with their contracted farmers and that CGA desists from recommending to its members prices for inputs and cotton seed given to contracted farmers, and the price of seed cotton offered to farmers.”

Section 42 of the Competition Act (1428) prohibits collusive arrangements between or among competitors.
The same Act empowers the CTC to issue judgments on matters regarding competition and tariffs. Such orders, which should be registered at the High Court, are legally binding and carry the same weight as a civil case order.

All appeals should be routed via the CTC.
Under normal circumstances, the cotton marketing season opens in April. However, this has stalled as stakeholders await the review of the order.

The last season closed with prices ranging from US$0,50 to US$0,65 per kilogramme.

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