The Ministry of Food, Agriculture and Livestock (Minfal) has strongly opposed hedge trading in cotton and cautioned the government that this mode of trade would hurt majority of the stakeholders of the cotton sector, it is learnt.
Minfal came with these comments in reply to a query from the office of the Advisor to Prime Minister on Finance, Dr Salman Shah, wherein its views were sought on hedge cotton trading.
Sources said that the Ministry noted that the existing mode of cotton trade suited all stakeholders who matter in cotton sector, and any change in it would not only have negative impact on the trade by promoting the culture of speculation, but would also hurt the real stakeholders, including growers.
The ministry said that Pakistan''s experience of hedge trading in the past was not encouraging as it hurt the real cotton sector stakeholders very seriously and promoted speculators.
It reminded that the government had introduced hedge cotton trading in early 1970s and after a few years had banned it on different grounds. It said that one of the reasons that led to banning of hedge cotton in Pakistan some 30 years back was erosion of small farmers and investors from the market.
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