COTTON GINNERS ASSOCIATION

versus

SINO ZIMBABWE COTTON HOLDINGS (PVT) LTD

and

AGRICULTURAL MARKETING AUTHORITY

HIGH COURT OF ZIMBABWE

CHIWESHE JP

Harare, 23 July 2010 and 28 July 2010

G. Gapuand A. Rutanhira, for the applicant

S. Kampila,for the first respondent

            CHIWESHE JP:  In this urgent chamber application the applicant, established in January 2006 to represent and coordinate companies in the cotton industry in Zimbabwe,  seeks a provisional order against the first respondent in the following terms:

            “TERMS OF THE FINAL ORDER SOUGHT

1. The first respondent is hereby interdicted from purchasing any contracted seed cotton from growers contracted to the applicant’s members.

1. The first respondent is interdicted from purchasing or taking delivery of any seed cotton packed in cotton packs bearing the logo or name or acronym of the applicant’s members.

1. The first respondent is ordered to render an account of the seed cotton that it purchased in Zimbabwe in year 2010 cotton marketing season showing the names of the growers from whom the cotton was purchased, their identity numbers and quantities of cotton seed purchased from each grower, within 10 days of being served with this Order.

1. The first respondent is ordered to surrender to the applicant all the contracted seed cotton purchased from growers contracted to applicant’s members during the 2010 season within 15 days of the date of this Order.

1. The first respondent shall pay costs of suit.

INTERIM RELIEF GRANTED

1. The first respondent is hereby interdicted from purchasing or taking delivery of any contracted seed cotton from growers contracted to the applicant’s members.

1. The first respondent is hereby interdicted from purchasing or taking delivery of any seed cotton packed in the cotton packs of applicant’s members.

1. First respondent is ordered to purchase seed cotton solely from the common buying points used by other cotton buyers in Zimbabwe.
2. Pending the confirmation of this Order, first respondent is interdicted from selling, exporting or howsoever disposing of any seed cotton purchased in Zimbabwe during the year 2010”.

In support of this application the applicant’s Director –General Mr Godfrey

Murombo Buka filed a founding affidavit whose contents are to the following effect.  The applicant’s members (twelve in number) are all registered as contractors and buyers with the Cotton Marketing Technical Committee in terms of s 9 and 10 of SI 142 of 2009.  These members have entered into contracts with individuals and groups of cotton growers throughout the country in terms of which they have technically and financially supported the growers with inputs.  They have also provided the growers with cotton packs to be used when packing the seed cotton for sale.  Applicant’s members have consequently spent considerable financial and technical resources supporting the current crop from planting up to harvesting.  In return, contracted growers are obliged to sell their seed cotton to the company to which they are contracted and the company is equally obliged to purchase the seed cotton from its contracted growers.  This contractual relationship, avers the applicant, is consistent with the provisions of s 14 of SI 142 of 2009.  The first respondent entered the cotton market on 24 June 2010 when it was awarded a licence to buy seed cotton during the 2010 season.

            According to the applicant, the first respondent is violating the law and the terms of its licence by inducing the contracted farmers to breach their contracts with applicant’s members and buying cotton seed from such contracted growers.  The applicant states that the first respondent’s operations cover areas in Mashonaland Central, Mashonaland West and the Midlands, particularly in the areas of Gokwe, Kadoma, Mhangura, Mount Darwin, Bindura, Guruve, Mutoko and Rafingora.  It also alleges that the first respondent is buying seed cotton contained in other companies’ cotton packs which packs it would then empty into its own packs.  Pictures depicting this state of affairs have been filed as annexures “E8” – “E17”.  The applicant further states that on 14 July 2010 the first respondent sponsored an advertisement in “The Herald” newspaper inviting all cotton farmers to sell their seed cotton to it as it was offering higher prices, labeling other buyers as “thieves” who were cheating the farmers by offering lower prices.  The same advertisement has been posted and published in all the areas where first respondent is operating.  The applicant has reported this matter to the police but to date no action has been taken.  A report was also made to the Cotton Marketing Technical Committee which in a letter dated 9 July 2010 warned the first respondent to stop its illegal activities.

The applicant says the first respondent is offering the price of 50 cents per kilogram which is higher than the average price of 40 cents per kilogram being offered by its members.  The first respondent, according to the applicant, can afford to offer that higher price because it has not incurred any production costs.  It is reaping where it has not sown.  The first respondent’s conduct, says the applicant, is illegal and highly prejudicial to the applicant’s members as they will not be able to recover their loans from the growers which  were secured by the crop nor will they be able to secure seed cotton for their ginning and processing factories.  Further, according to the applicant, the first respondent’s actions will undermine the availability of cotton seed next season, thus prejudicing growers and the cotton industry at large.  The applicant’s members may also, as a result, fail to support the growers in future as they would have been driven out of business.

In support of this application various annexures comprising inter alia photographs, contract agreements, letters, resolutions, constitution and members’ reports have been filed by the applicant.

The first respondent filed a notice of opposition and an opposing affidavit sworn to by its director, Mr Jimmy Zerenie.  It also filed a supporting affidavit by Mr Tanga Matema, a director of Plotland Investments (Pvt) Ltd, the purchasing agent of the first respondent.

The opposing affidavit is to the following effect.  Firstly the first respondent raises a point in limine namely, that the application lacks urgency.  With regards the merits the first respondent denies “inducing” any contracted grower to do business with it and states that it has not purchased any contracted cotton.  It is suggested that the applicant is motivated by fear of competition in the cotton industry and that the order sought, if granted, would stifle first respondent’s operations.  The first respondent denies breaking any law or inducing any grower to break the law. It says that its operations are transparent and every grower who sells to it is required to fill in declaration forms H and I, copies of which are filed of record, declaring under form H that he is not contracted to anyone and, under form I, that he is contracted but has discharged his obligations under such contract or has cotton in excess of what he is required to sell in terms of his contract.  The first respondent further states that there is no law which bars it from buying ‘free” cotton or any arrangement that prohibits competition amongst the players in the industry.  The first respondent reiterates that it is its policy not to buy contracted cotton.  Where “free” cotton has been brought to it in other companies’ wool packs, the first respondent has insisted that these be replaced, as long as the cotton is free.  The first respondent also states that in some instances the growers are not aware that they should not use other companies wool packs and, in some instances, some growers have indicated that they owned the packs.

The first respondent says the advertisement in “The Herald” warns growers against dealing with unscrupulous middlemen.  It sees nothing wrong with that. The first respondent maintains that it has not committed any criminal offence hence there is no basis upon which the police may be expected to intervene.  It says that the farmers are benefiting from its prices.  If any grower has breached the terms of his contract the first respondent avers that the applicant should take it up with the grower concerned.

The supporting affidavit of Mr Tanga Matema corroborates the opposing affidavit made on behalf of the first respondent.  In particular attention is drawn to clause 4.2 of the agreement between the first respondent and Mr Tanga Matema’s company, Plotland Investments (Pvt) Ltd, wherein the agent company is prohibited from purchasing cotton contracted by other companies.  Mr Matema says they have only been buying cotton from uncontracted and “free” cotton from contracted growers.

The applicant filed a detailed answering affidavit and annexures K 1 to K 3, all being sample contracts and receipts relating to the operations of some of its members.

The applicant has filed heads of argument.  At the hearing of this application the first respondent raised a point in limine, namely that the application lacked urgency.  I ruled in favour of the applicant because it was shown prima facie that the applicant’s members could face financial collapse and, because of the short marketing season, it was important that the applicant seeks urgent relief.

However, the applicant is prematurely before this court.  It has not exhausted the internal remedies available to it.  In fact the Cotton Marketing Technical Committee is seized with this matter which was referred to it by the applicants.  The Committee has written to the first respondent warning it against engaging in trade practices which violate the terms and conditions of its trading licence.  My understanding is that the Cotton Marketing Technical Committee is a committee of the second respondent.  In terms of the Agricultural Marketing Authority Act [Cap 18:24] the second respondent is endowed with wide ranging powers and functions over the marketing of agricultural products. s 5 provides:-

1. FUNCTIONS AND POWERS OF AUTHORITY

1. Subject to this Act, any regulatory Act and any other enactment, the functions of the Authority shall be –
   1. to regulate the participation in the production, buying or processing of any agricultural product by producers, buyers or processors or classes of producers, buyers or processors of any agricultural product upon  such terms and conditions including, as appropriate, the fixing of quotas, as may be prescribed,
   2. to promote the proper marketing and fair pricing of any agricultural product by any producers, including producers in the communal and resettlement areas, who the Authority considers  require assistance:
   3. to properly co-ordinate its operations with those of any statutory body charged with the regulation and marketing of any agricultural product to ensure that the operations of any such statutory body accord with the purposes of the Authority and at all times to act in the economic interests of all the parties concerned and in the national interests.
   4. To promote contract farming of strategic crops
   5. ………………………….
   6. ………………………….
   7. ………………………….
   8. ………………………….
   9. …………………………..
   10. …………………………..
   11. …………………………..
   12. …………………………..
   13. …………………………...”

Section 3 (1) of SI 142/2009 provides:

            “3  (1) All functions which under the Act the Board (of the Agricultural Marketing                        Authority) may exercise in relation to any agricultural commodity shall, in

                         terms of these regulations, be exercised on its behalf by a Committee of the

                         Board established in terms of s 13 of the Act to be known as the Cotton

                         Marketing Technical Committee.”  (My own brackets).

The general functions of this Committee are outlined under s 3 (3) as follows

          “(a)    To promote the growing, ginning, processing, manufacture, preparation or  

        marketing of seed cotton, seed cotton, cotton planting seed, cotton lint and seed

        cotton products and

1. to set and maintain standards relating to the quality, classification, grading, moisture content and packaging of seed cotton, lint or cotton seed which may be –
   1. accepted by the Committee, a ginner or any other person; or
   2. sold by a person, other than the Committee, whether for use within or outside Zimbabwe; and
2. to assist in  the training, examination and accreditation of graders of seed cotton; and
3. to ensure that fair trade practices prevail in the cotton industry”  (My own underlining).

The Committee is also charged with the responsibility of registering buyers,

contractors, growers and their associations.  Registration is a prerequisite to doing business in the cotton industry.  The Board is required to issue certificates of registration to all players who meet its criteria.  The certificates are renewable annually.  By the same token the Committee has the power to cancel the registration of any player.  Aggrieved persons in that regard may appeal to the Board whose decision shall be final.

SI 142 of 2009 also provides for various offences under s 22.

            Section 49 of the Agricultural Marketing Authority Act provides for appeals against decisions of the Board.  An aggrieved party may appeal to the Minister and ultimately to the Administrative Court.

            The cotton industry is a highly organized and regularized sector.  I would expect that the applicant would, in the first instance as it has done, forward its urgent complaint to the Technical Committee.  In the event it was aggrieved by the decision of the Committee it would then approach the Board, then if still aggrieved, the Minister, and if needs be, the Administrative Court.  As it is, the applicant has brought its case to the “wrong” forum.  It has jumped the gun, so to speak.

            In my view the Cotton Marketing Technical Committee is still seized with the matter.  The fact that in the instant case the committee has issued written warnings to the first respondent and taken, so far, no further action does not in itself mean the Committee has abandoned its statutory role.  A warning might well be what the Committee believes to be adequate or appropriate.  With further reports or information they might act substantively either by dismissing applicant’s concerns or acting upon them.  After all, by applicant’s own admission, the bulk of the cotton is still on the market.

            It is clear from the provisions of the Agricultural Marketing Authority Act and SI 142 of 2009 that the day to day affairs of the cotton industry are regulated, controlled and administered by the Board and its Technical Committee.  To launch an application of this magnitude without citing them (save for purposes of information only) is ill advised.  Sight must not be lost of the fact that the court, unlike the Board and the Committee, is far removed from the theatre of the cotton industry.  Hearing interested parties in the absence of an impartial and informed regulatory authority, which is hands on with the goings on in the cotton industry would hardly give the court the basis upon which sound and wholesome decisions could be made.

            Some of the facts in this matter are by no means common cause.  The contradictions can only be resolved by hearing viva oce evidence and possibly going on the ground  to examine the factual position.

            In any event, the order that the applicant seeks is so drastic and far reaching that a reasonable court would be reluctant to grant it on the basis of the scanty information presented in this urgent chamber application.

For these reasons it is ordered that the application be and is hereby dismissed with costs.

Scanlen  & Holderness, applicant’s legal practitioners

Chinamasa, Mudimu & Dondo, first respondent’s legal practitioners