Low cotton yield raises cost of doing business: APTMA

Zahid Mazhar Senior Vice Chairman All Pakistan Textile Mills Association (APTMA) has said that failure of cotton yield as anticipated for the third consecutive year has resulted in further increase in the cost of doing business. He said that the spinning sector is the backbone of the textile value chain which bears the brunt of high cost of doing business for the last few years and making it unviable to do business. Presently, the spinning industry is incurring heavy losses by selling yarn below its cost due to poor demand from the domestic consumers, he added.
In a statement, he said that the production of yarn is substantially more than the local consumption; therefore, their exports must be encouraged at all costs, otherwise it will result in permanent closure of a large number of mills resulting in unemployment. Mazhar said that hue and cry regarding increase in prices of yarn in the domestic market does not hold any ground as cotton crop failure for the third consecutive year and the ensuing increase in prices of cotton has increased the cost of doing business for the spinning sector of the country.
Furthermore the cosmetic solutions like imposition of 4 percent custom duty and 5 percent Sales Tax on the import of cotton has further increased the cost of doing business which is already high as compared to the competitors in the region, which is the main reason behind the recent upward movement of price of yarn in the country, he mentioned. In addition to the above, government has also imposed Non-Tariff Measures like restriction on import of cotton from India has also hurt the spinning industry of Pakistan very much, he added.
Senior Vice Chairman APTMA said that in the first quarter of the current Financial Year exports of Knitwear has increased by 15.4 percent in quantity terms and 9.3 percent in value terms, Bed Wear by 1.8 percent and 7.2 percent in quantity and value terms respectively. Ban on yarn exports will result in permanent massive closure of mills contributing to unemployment, he said.
In support of his argument regarding the export of yarn, he said that as per data of Pakistan Bureau of Statistics, total production of Yarn in the year 2016-17 was 3,428,730 tons whereas cotton yarn exported in the same period was 455,345 tons which is only 13.28 percent of the total production of the year. The domestic consumers of yarn should not expect the spinning mills to subsidize their costs by providing them yarn below cost rather they should explore other avenues to increase their margins.
He further demanded the government to make serious efforts in increasing the size of the annual cotton crop to 20 million bales following the example of India. This on the one hand will boost the income of the farmers and on the other hand reduce the input costs of all the sectors of the textile.