Prices Paid to Cotton Farmers: How Does Zambia Compare to its African Neighbors?

1. Zambia has paid among the best nominal seed cotton prices to farmers in SSA since 1995. 2. By a more refined measure (share of FOT), during 1995-1999, Zambia paid prices comparable to those in Tanzania (a very competitive sector), and substantially higher than in Mozambique and WCA. However, from 2000-2005, Zambia's pricing performance fell, and exceeded only Zimbabwe and Mozambique in our sample 3. The recently announced reference price for 2008 of ZKW 1,200/kg of seed cotton was negotiated and jointly announced by ginners and farmers. It amounts to about 53% of FOT at current exchange rates and Index A prices; about equal to recent shares received by farmers in Zambia, but well below levels in WCA and Tanzania. 4. What “rules of the game” are needed for farmers and ginners to continue working together so that the costs and benefits in Zambia’s cotton sector are shared equitably