All data are collected in the Fiscal Year of 2008-2009.

Mozambique / Agriculture

Dunavant Enterprises, Inc. is the largest privately owned cotton merchandiser in the world, handling in excess of 6 million bales of US and foreign cotton per annum.

Dunavant owns various real estate development companies, a truck brokerage company, cotton warehouses in the United States and Australia, ginning operations in Zambia, Uganda, Mozambique, and Australia, as well as a commodities trading company with locations in New York, New York and Memphis, Tennessee.

The company was founded in 1929 and is headquartered in Memphis, Tennessee. Through the Depression and World War II, the business evolved into W. B. Dunavant and Company. William B. (Billy) Dunavant joined the firm with his father in 1952, and became CEO of the company at the age of 29 when his father passed away in 1960. Under Billy’s leadership, the company became a far more aggressive and innovative business, initiating “forward contracting” and recognizing early on the potential for US cotton sales into export markets. The firm grew from a small scale Memphis trader into a cotton merchant handling all world growths, and selling to textile mills around the world.

Throughout the 80s, 90s and into the 2000s, the company expanded its operations into all regions where cotton is of economic importance, through acquisition or construction of fixed assets in remote areas, including cotton gins and warehouses in the American Southwest, Australia, Central Asia, and Eastern Africa.

In Mozambique, Dunavant commenced its activities in the Tete province in 2001. In October 2003 Dunavant took over Agrimo Ltd and merged the two operations as a subsidiary of Dunavant SA, Geneva.

Dunavant Mozambique Ltd runs an extensive seed cotton outgrowers scheme, providing extension and input support to some 40 000 farmers in the provinces of Tete and Zambezia. The seed cotton is processed through the companies ginnery located in the Morrumbala district and a second ginnery is planned for the Chiuta district.

The company trades its lint regionally while most of the seed it produces is processed into oil and stock feed in the Zambezia province.

Dunavant (Mozambique), Ltd. Morrumbala, District, Zambézia Province, Mozambique

Dunavant Enterprises, Inc., together with its subsidiaries, engages in ginning and trading cotton products. Dunavant is currently engaged in cotton production through smallholder farmers in Central Mozambique.

130 permanent employees plus 200 seasonal employees in Mozambique.

Dunavant’s target areas for cotton production, yields currently average around 520 kgs per hectare.

Dunavant is the main purchaser of Mozambican cotton

“To stay ahead of trends, or create them, in order to provide our customers with the best cotton fibre for their needs, at the best price, and with the highest level of service”

“To increase the production efficiencies and, consequently, the household wealth of 60,000 small-scale cotton growers in central Mozambique and improve cotton income among existing cotton farmers by 35% and first-time cotton farmers by 130%”

“Dunavant Mozambique will be the lead firm driving the expansion of cotton in the project target areas and will work with the project to mitigate the risks involved in transferring new technologies, credit and other services to 60,000, small-scale farmer families in remote areas of Mozambique. Existing farmer groups and existing rural enterprises will provide key leverage points to reach large numbers of farmers and increase crop value.

The project’s vision of success is that, within 10 years, 100,000 farmers will have tripled their incomes from cotton and other crop production and will have the financial means to engage and profitably invest in multiple value chains.”

Dunavant Mozambique, LDA, is a wholly owned subsidiary of Dunavant Enterprises, Inc.

When Mozambique became independent in 1975, the government officially launched a centrally planned economy, nationalizing all the cotton companies in the country. As a result of the combination of the centrally planned economy (with extremely low national capacity to run nationalized companies, combined with the civil war that destroyed the country’s infrastructure and provoked disconnections between rural and urban areas with clear instability in rural areas and strong disincentives to agricultural production), cotton production collapsed and annual volumes decreased to around 10 000 MT by 1985.

In 1986, the government introduced joint venture companies, and cotton production was re-launched. In 2000, new private companies either initiated activities in provinces other than the traditional cotton producers or took over the areas previously explored by others. For instance, Dunavant and Cottco started operating in Tete and Manica Provinces and Plexus took over the Lomaco concession area in Cabo Delgado.

The entrance of international companies (Dunavant, Plexus, etc) either in areas previously under traditional Portuguese concessions (e.g. southern Cabo Delgado province) or in areas less traditional in cotton production (e.g. Tete and Zambezia provinces) resulted in new, better concession practices and consequently higher yields.

In 2007 for the first time representatives of the Mozambican government's Cotton Institute (IAM), the cotton companies, and the associations of peasant farmers who grow the cotton met to discuss the indicative price for the purchase of raw cotton from the farmers. In the past the minimum cotton price was fixed each year by the National Wage and Price Commission, after consulting the IAM and the companies, but with almost no input from the producers.

The main tax is VAT (17 percent), which was introduced in 1998 to replace a consumption tax (5 percent). There are significant exemptions to VAT that affect agricultural products, including a total VAT exemption on seeds. The cotton sector is structured in a closed geographical concession system where farmers are forced to sell to the concessionary Ginning Company, and on exchange, they receive inputs and extension services on credit.

The Bill and Melinda Gates Foundation awarded US$8 million to the program Dunavant Enterprises started to help improve cotton yields in 2007. In three years, the number of farmers enrolled in Mozambique has doubled to more then 35 000, or about 20 percent of that nation's small farm families, according to the National Cooperative Business Association, the non-government organization that oversees the grant.

Dunavant is working with GAPI, a financial services company in Mozambique that promotes investment in small and medium-sized businesses in remote parts of the country. The grant is also used to improve literacy, health care systems and the marketability of cotton and its rotation crops.