KARACHI: A bearish trend prevailed in the cotton market, sending spot rate drop by Rs 1000 per maund. International cotton market also sees significant decline. Ginners, cotton farmers, and textile mills are all worried about the situation. Cotton farmers are disappointed due to low prices of Phutti. Future cotton production may be affected. Large textile groups are making import deals.
Patron-in-Chief of All Pakistan Textile Mills Association Gohar Ejaz has warned that if agreements of Independent Power Producers (IPPs) are not revised then industrialists and traders will shut down their businesses. He also announced to approach Supreme Court on the issue of IPP.
However, Vice President Pakistan Central Cotton Committee Dr Yousaf Zafar said that collaboration and mutual research between PCC and United Nation Food and Agriculture Organisation will promote cotton.
Head Transfer of Technology PCCC Dr Sajid Mahmood said non-payment of cotton cess by textile mills is hindering the development of cotton.
The local cotton market experienced an unusual decline in cotton prices during the past week, due to panic selling caused by the downturn in international cotton markets. Similarly, a significant drop was also observed in the prices of Phutti, leaving cotton farmers in a state of distress.
The low price of Phutti is likely to discourage cotton farmers from cultivating it, which may impact cotton production. Ginners are also worried about the daily decline in cotton prices. The increasing burden of taxes is causing them distress.
The exorbitant energy costs, particularly due to unjust capacity payment charges of IPPs, have caused distress among industrialists. Almost all industrialists, trade associations, industrial organisations, and federations in the country are united in protest against the IPPS and are planning to launch a campaign and hold protest demonstrations against it.
The government is just issuing statements, but there is a lack of practical actions, which is severely impacting industries and businesses. Factories and industries are shutting down, and unemployment is increasing. No one is satisfied. On the other hand, there is a significant downturn in international cotton markets, which is having a notable effect on local cotton.
The price of New York cotton futures has fallen to 67-68 US cents per pound, the lowest level in the last four years, due to a strong dollar and improved cotton crop in the US.
Due to low cotton prices in New York and other countries, large groups of local mills are inclined towards importing cotton, which is attributed to lower prices, good quality, and the benefit of EFS on imported cotton, which has been discontinued on local cotton.
In the province of Sindh, the price of cotton is in between Rs 16,800 to Rs 17,000 per maund, while the price of Phutti is in between Rs 6,800 to Rs 7,000 per 40 kg.
In the province of Punjab, the price of cotton is in between Rs 16,800 to Rs 17,300 per maund, while the price of Phutti is in between the range of Rs 7,200 to Rs 7,800 per 40 kg.
In the province of Balochistan, the price of cotton is in between Rs 16,800 to Rs 17,000 per maund, while the price of Phutti is ranging in between Rs 6,800 to Rs 7,400 per 40 kg.
The Spot Rate Committee of the Karachi Cotton Association decreased the spot rate by Rs 1,000 per maund and closed it at Rs 17,000 per maund.
Chairman of the Karachi Cotton Brokers Forum, Naseem Usman, has stated that there has been a significant decline in international cotton prices. The price of New York cotton futures has fallen to 67-68 US cents per pound, the lowest level in four years, attributed to a strong dollar and improved crop yields.
According to the USDA’s weekly export and sales report, for the year 2023-24, 74,200 bales were sold. Vietnam topped the list with 42,400 bales, followed by Turkey with 10,700 bales in second place, and Nicaragua with 7,000 bales in third place.
For the year 2024-25, more than two lac and eighty five thousand bales were sold.
Mexico led the list with 64,500 bales, followed by Vietnam with 58,200 bales on second place, and Turkey with 52,600 bales on third place.
Meanwhile, Patron-in-Chief APTMA and former caretaker Federal Minister Gohar Ejaz has said that if the IPP agreements are not reviewed immediately, businesses will shut down. In an interview, he said that the most expensive IPP agreements have been an injustice to the nation. He said we are exposing the mismanagement, incompetence, and corruption that have taken place under the IPP umbrella. He asked, “Why is electricity worth 24 rupees per unit being sold to industries and the public for 60 rupees per unit?” He also stated that Nepra’s role is extremely negative and anti-people.
Furthermore, Punjab Governor Sardar Saleem Hayder Khan said that the country is currently going through difficult times, and due to gas and electricity load shedding, industry has shifted to Bangladesh and Sri Lanka. Today, the poor public is distressed due to inflation and electricity bills.
However, All Pakistan Textile Mills Association (APTMA) has demanded review of the IPPs agreements and forensic audit of the independent power producers (IPPs).
Chairman APTMA Asif Inam has said that the expensive electricity has made it difficult to export. “We have pointed out the line of action,” he said.
He demanded of the government to initiate forensic audit of the independent power producers (IPPs). He also urged for a hurried review of the contracts with the IPPs. He said capacity charges and expensive power have negative impacts over the exports from Pakistan. He pointed out that the private sector’s IPPs owners are Pakistani citizens. It is pertinent to mention here that textile is Pakistan’s largest industry and the most important export from the country.
The collaboration and partnership between United Nation’s (UN) Food and Agriculture Organization (FAO) and the Pakistan Central Cotton Committee (PCCC) will be instrumental in aligning cotton production technology with international standards to advance and promote cotton production in the country.
This was stated by Dr Yusuf Zafar, Vice President of PCCC, in a meeting with a three-member FAO delegation led by Emilda Berjina, Senior Technical Advisor (Punjab)/ FAO Project Manager on Friday at the PCCC headquarters here. She was accompanied by Mudassir Hayat and Mudassir Maqsood from FAO.
Dr Yusuf Zafar hoped the mutual cooperation and partnership would turn out to be fruitful on way to achieving goals of enhanced cotton production and take white gold quality to new highs.
Under this partnership, both organizations shall work on modern research projects with anticipation that FAO’s global expertise and PCCC’s local knowledge will combine to align the cotton production technology with international standards. It will help strengthen the cotton industry in Pakistan and introduce farmers to advanced techniques, potentially leading to significant improvements in the country’s economy and agricultural output, says an official release.
Emilda Berjina said on the occasion that Rs 30 million Ediflux Tower installed at CCRI with FAO’s support, has further strengthened the mutual cooperation and partnership between the two organisations. This advanced tower will play a crucial role in cotton research and development, enhancing cotton production and quality through environmental measurements and data. The Ediflux Tower will enable analysis of carbon fixation, water needs, and the effects of climatic factors, improving cotton plant growth and disease resistance. This partnership will promote modern techniques to benefit local farmers.
The non-payment of cotton cess has severely impacted the research work of PCRC and has had negative effects on cotton production in the country.
This was stated by Sajid Mahmood, Head of the Department of Transfer of Technology, Central Cotton Research Institute, Multan, while talking to this scribe over the phone. He further said that about 80% of textile mills, under the umbrella of the All Pakistan Textile Mills Association, have stopped paying cotton cess since 2016. For the past 8 years, textile mills have continuously entangled the pure cotton research institution PCCC in litigation and court proceedings, which has had negative effects on cotton research and development. Mills have filed 65 cases against PCCC, out of which PCCC has won 63 cases, while 2 cases are still pending.
Sajid Mahmood said that in 2012, the ECC meeting decided to increase the cotton cess by 30% every three years. This decision was made in view of the increasing inflation and financial needs of PCCC. One of the objectives of the decision was to provide a permanent roadmap for PCCC, so that it would not need to seek approval from ECC repeatedly. However, APTMA has not implemented the ECC decision to date and has been using various excuses to delay it. In 2022, during a meeting at the Ministry of National Food Security and Research, APTMA’s representative promised to pay the outstanding amount of cotton cess in instalments, but unfortunately, this promise has not been fulfilled yet. It is essential for the survival of PCCC, a vital national research institution for cotton. The state should exercise its legal powers and take legal action against mills that violate the Cotton Cess Act. The government should make the import and export of all textile products conditional on the payment of cotton cess and make it mandatory for mills to obtain an NOC from PCCC, as was done in the past.
Copyright Business Recorder, 2024
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