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July 15, 2013

High Tech Cotton Gin Offers Secure Future for Farmers

by Kim Lewis

Olam International, a leading global integrated supply chain manager, that has been active in Mozambique for 15 years, announced this year, the construction of its first state-of-the-art roller cotton gin.

The company, which is engaged in processing and packaging agricultural products and food ingredients, has been helping farmers to produce a variety of sustainable crops that offer a guaranteed income.

One of its most important efforts is promoting the production of cotton.  Olam said it is continuing to make progress toward its goal of increasing local production of the commodity in rural areas of Mozambique. 

“In cotton, we partner with farmers, teach them best farming practices, provide them support, and provide them a ready market to buy back the crop that they produce.  Much of the farming of cotton happens in deep rural areas, and therefore, getting cash on the spot, to support the farmer is one essential necessity, simply because the banking system does not extend that efficiently,” explained MD Ramesh, regional head of east and southern Africa at Olam. 

While the company provides services to farmers, it is ultimately the farmer’s responsibility to produce the cotton.

“Most of them work on small sectors of land on which they produce the cotton, and we buy it back and take it to our cotton gins.  We already have three gins in Mozambique, and this is actually our fourth.  It’s in a place called Beira -- where we plan to support about 10,500 farmers,” said Ramesh, who added, “the newest gin should be up and running towards the end of this year.” 

The east and southern regional head of Olam noted that farmers benefit economically through the market that the company offers for cotton production, and by having the cotton gins in areas close to where they farm.

“We also support them through providing logistics and supply chains after the harvest is completed.  [That] means all they have to do is just use our support, use the seed that we provide them, use the agronomical practices that we teach them, so that they pull in the best practices and produce the cotton,” said Ramesh.

Because Olam bears the brunt of the expenses, there is very little financial burden on the farmer, and he or she is able to focus more on the actual growing of the crop. The new cotton gin now under construction will offer thousands more farmers the opportunity to have a steady flow of income.

“Specifically to the Beira gin, the 10,500 farmers would have approximately 1 ½ to 2-million dollars in advance against buy- back of the crop. They have the support, they have a buy-back, and they have a fixed price that is pre-decided before the season begins. The farmer has to put in his hard work and produce the cotton,” explained Ramesh.

He also pointed out that Olam’s goal is to have cotton increase farmers’ incomes – by making it easier to grow along with other crops.  The cotton gin is an important part of making that goal a reality:  Olam officials say farmers in Mozambique will be able to reap the rewards of the goods and services of the new state-of-the-art gin for the next 25-30 years.