It is hoped that trading activities will start in the cotton market after the government has given the permission to the textile sector to resume their operations. Cotton crop is under threat of Locust attack. Summary of fixing the support price of cotton should be reviewed. The announcement regarding fixing of support price of cotton after the completion of sowing season will not be beneficial.
In the local cotton market during the last week there was no business due to the coronavirus lock down however there were reports of some deals from the market however the deals were not verified so they were not reported by Karachi Cotton Association. The Spot Rate Committee of Karachi Cotton Association has decreased the rate by Rs 200 per maund and closed it at Rs 8600 per maund after looking the trend of international cotton market.
The government has given the permission to textile sector to resume their operations on the condition of following the Standing Operating Procedures of the government. After that it is hoped that cotton business will resume partially. However, for the last two months mills were remained closed due to which they had the stock of cotton that's why limited buying will be witnessed in the market. On the other hand ginners had the stock of 5 lac bales and they were looking for the buyers. They also had to pay the interest while the cotton is loosing weight due to the sunshine. The rate of cotton in Sindh and Punjab is in between Rs 7000 to Rs 8600 per maund but there was no business.
The sowing has completed in the lower areas of Sindh and now the sowing has started in the upper areas of Sindh as well as in Punjab. The farmers were complaining regarding the low germination value of seeds. The farmers were trying that government should resolve the longstanding issues of farmers including fixing of support price of cotton. The government is also willing to announce the support price of cotton.
The new minister of National Food Security and Research Syed Fakhir Imam had sent a summary to the Economic Coordination Committee. The summary was the part of the agenda of the ECC meeting held last Wednesday. The farmers were hopeful that ECC will accept their longstanding demand and announce the support price of Rs 4200 per 40 kg of Phutti. They were also hopeful that ECC will also approve buying of 20 lac bales of cotton through Trading Corporation of Pakistan but alleged mafia was succeeded in rejecting the summary by using his influence. Thus frustration spread among cotton growers and they started thinking of cultivating another crop. It is feared that next year cotton crop will not be according to the expectations of the government.
President Pakistan Kissan Ittehad Khalid Khokhar in its statement after the rejection of summary in the ECC meeting held on May 7, said that it is the black day for the growers in general and the cotton growers in particular, as in the battle of industry and agriculture once again industry has defeated agriculture with full force. He also said that All Pakistan Textile Mills Association had once again won the battle.
He said that since 2010 cotton cultivation has been decreased by 20 percent while the area of corn cultivation has increased.
The Federal Agriculture Committee of the government was unable to determine the cotton production area. In the coming days cotton production area will be determined. It is hoped that this time members of the committee will give correct estimates of production area of cotton.
The Food and Agriculture Organization (FAO) of the United Nations in a recent report has warned of a potentially serious food security crisis this year in several regional countries, including Pakistan, due to locust attacks. It is expected that Pakistan's Rabi and Kharif crops will be badly affected by Locust attack. According to the estimates Pakistan's economy has to bear the loss of Rs 669 billion due to the Locust attack during the current year.
Sindh agriculture Minster Ismael Rahoo has issued his number 0345-6006060 for any information regarding Locust attack.
Chairman Karachi Cotton Brokers Forum Naseem Usman told that mixed trend was seen in international cotton market.
After fluctuation the Rate of Promise (Waday Ka Bhao) of New York Cotton increased and reached at 56.27 American cents. China has again started taking interest in American cotton. According to USDA weekly report China has bought thousands of bales of cotton. The rate of cotton remained stable in China. In India the rate of cotton decreased after fluctuation. In first two days the rate of Candi (356 Kg) decreased by Rs 800. On Thursday the rate increased by Rs 400 as a result of which rate decreased by Rs 400 per Candi.
Moreover Chairman Cotton Association of India Atul Ganatra in its statement said that demand of cotton decreased due to closure of mills. Cotton Ginning industry has reached on the verge of collapse. Bail out package should be announced for the industry. If the government bought surplus stocks payments will be given to farmers.
Senior Vice chairman of Federation of Pakistan Chambers of Commerce and Industry, chairman Pakistan Business man and Intellectual Forum, President Karachi Industrial Alliance and former MPA Mian Zahid Hussain said that refunds that have been stuck for the last ten years should be paid.
He also said that textile sector which is the biggest foreign exchange earner and biggest job provider after agriculture is on the verge of collapse. He said that if the immediate bail out package is not announced then the country will suffer an irreparable damage.
Mian Zahid while talking to business community said that various sectors of the textile industry are in decline. While due to unprecedented economic conditions cotton and ginning industry has reached on the verge of collapse. He said that immediate steps should be taken to save the industry from permanent closure. He also said that at this time 5 lac cotton bales of worth Rs 20 billion were laying under the open sky and there was no buyer in the market because mills were closed due to the coronavirus lock down. The ginners were unable to pay to the farmers because their 30 billion rupees were stuck with the textile mills. He suggested that if the government bought these bales through Trading Cooperation of Pakistan then the ginning factories will come out of the crisis and payments will be made to farmers.
He also demanded that government should exempt cotton seed, Khal and Banola from sales tax. Government should release sales tax amount stuck up for ten years. The government should waive off the interest on the loans from January 1st to June 2020. The cotton stock available with ginners should be exempted from income tax, sales tax and other taxes so that they will be able to sell it. Government should also allow them to sell mortgage stock and concession should be given for adjustment in bank guarantee for one year. He said keeping in view the importance of ginning sector electricity should be provided them at the rate of Rs 10 per unit so that it should be stopped from closure. The sector should be given more incentives.
He further said that if immediate steps are not taken to solve the issues of the ginners then payments to the farmers will be delayed adding that farmers will loose their interest in cotton crop and many farmers will cultivate other crops. It is feared that this will affect the cotton production target as well as it has strong affect on the country's economy because 60 percent of our economy and employment is related to cotton.
Chairman APTMA Sindh and Balochistan has appealed to the Sindh governments that like Punjab whole supply chain of textile industry in Sindh should be allowed to resume it's operations. Moreover chairman Pakistan Hosiery Manufacturers and Exporters Association Salamat Ali has welcomed the announcement of resumption of business activities in the country.
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