The wrong shortage

Good afternoon. Mozambique’s government wants to triple annual cotton output from roughly 20,000 tonnes to 60,000 tonnes. A new financing scheme should help farmers obtain seed, other inputs and machinery, reportedly offering more than MZN50m ($780,000) in annual investment through 2029. But the sector’s long decline cannot be explained by credit shortages alone. Farmers must also believe that growing cotton will pay better, and more reliably, than using the same land and labour for another crop.

The government says seed cotton output reached about 180,000 tonnes in 2011–12 and stood near 40,000 tonnes last year. The collapse of Plexus, once a buyer and input provider to tens of thousands of smallholders, removed much of the system through which cotton was grown and sold in Cabo Delgado, but it is not the whole story. In 2024, Zitamar reported that producer numbers and cultivated area had dropped sharply, even though output had edged up from the preceding season. Replacing that commercial network requires more than an allocation in a budget.

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The scheme is wider than cotton. The reported annual investment covers cotton and oilseeds, and is intended to support mechanisation, storage and local processing as well as inputs. Its goal of reaching 50,000 producers and mechanising more than 40,000 hectares by 2029 does not tell us how much money will reach an individual cotton grower, or in which season. Dividing MZN50m by 50,000 and calling the result a farmer’s loan would therefore misdescribe the plan. The government should publish the annual funding, eligibility rules, repayment terms and targets for each crop.

Some design details are already public. Under the strategy presented this month, development finance institution Gapi is to manage input credit in 2026; equipment and processing finance would follow from 2027. Reported terms include interest of zero for eligible producers within a promotion network and 5% outside it. Companies would distribute inputs, provide technical help and buy the harvest, while farmers would be expected to sell all their output to those companies. This may make lending workable, but it also puts the reliability and bargaining power of the buyer at the centre of the farmer’s decision.