January 9, 2012

Ugandan government steps in on controlling cotton prices

The Ugandan Government has decided to intervene to stabilise cotton prices in consideration with the call of cotton growers who are in a fix due to falling prices of the commodity.

Cotton is an important commodity for Uganda, as its sales proceeds can be used to obtain oil, chicken feed, gun powder, clothes and other items, and hence the Government would intervene to stabilise its prices, President Museveni said.

In order to stabilize prices of cotton, the Government would devise policies devised to arrest or at least hold back rapid changes in prices, more often during times of inflation or shortages, he added.

Cotton prices have declined sharply from a high of UGX3,600 (US$1.48) per kilogramme to UGX800 (US$0.33) per kilogramme by end of last year. Moreover, the Cotton Development Organisation (CDO) has declared that cotton prices would be fixed at UGX1,000 (US$0.41) per kilogramme due to a decline in global prices.

Since last year, Ugandan cotton farmers have been urging the Government to step in and stabilize the prices, to save them from the menace of "unfair pricing mechanisms".

Meanwhile, farmers representing the Nyakatonzi Growers Cooperative Union have sought representation in the meetings between the CDO and the Uganda Ginners Association to fix the cotton prices.