KARACHI: The rate of cotton remained stable. Ginners of Sindh had reduced buying of cotton as a protest as uncertainty in Pakistan Cotton Ginners Association due to tax hike. Trading volume remained thin. It is feared that ginning factories and oil mills may stopped their operations as a protest. Textile and Value Added sector was not happy over delay in the announcement of next five years textile policy.
The local cotton market during the last week overall remained stable due to the continuous buying by the textile mills while 15000 bales of cotton prepared from new crop of Phutti of Sindh were delivered to Punjab and Sindh. In Sindh the arrival of cotton is satisfactory. In Sindh twelve ginning factories have started their operations partially. In Punjab five ginning factories have started their operations partially with the Phutti of Sindh while in Punjab arrival of Phutti has started partially.
Last Wednesday, there was a tussle between the ginning factories of Sindh province and the brokers of Phutti as a result, of which the ginners of Sindh immediately called a meeting and stopped the buying of Phutti for the time being.
The PCGA sent a letter to the Cotton Commissioner in which it said that cotton production in the country is low this year. Sindh’s Phutti goes to the ginning factories of Punjab province, due to which the factories of Sindh get Phutti in less quantity and at higher prices. As a result of which many factories stopped their operations due to loss. So there should be a complete ban on inter-provincial movement of Phutti. Ginners of Punjab expressed displeasure over this move of Sindh ginners. The process of ginning had stopped in ginning factories of Sindh due to shortage of supply.
People related to cotton business were of the view that government had increased GST on cotton from 10% to 17% and imposed 17% GST on Phutti in the federal budget. They were of the view that PCGA instead of talking to government on imposition of taxes using his energies on imposing ban on inter-provincial ban on the movement of Phutti. It will be difficult to run ginning factories and oil mills if the government had not withdrawn the decision of imposing GST on cotton and Phutti.
The rate of cotton in Sindh is in between Rs 13000 to Rs 13300 per maund. The rate of Phutti is in between Rs 5700 to Rs 6000 per 40 kg. The rate of Banola is in between Rs 1800 to Rs 2000 per maund. In Punjab the rate of cotton is in between Rs 13700 to Rs 14000 per maund. The rate of Phutti is in between Rs 6200 to Rs 6300 per 40 kg while the rate of Banola is in between Rs 2000 to Rs 2300 per maund.
The Spot Rate Committee of the Karachi Cotton Association has increased the spot rate by Rs 300 per maund and closed it at Rs 12600 per maund.
Chairman Karachi Cotton Brokers Forum Naseem Usman told that over all markets remained stable worldwide. The Rate of Promise (Waday Ka Bhao) of New York Cotton was in between 84 cent to 85 cent per pound. According to USDA weekly export report the exports increased by three percent. Pakistan was on number one with importing 53000 bales while Turkey was on number second with 17000 bales.
The arrival of new cotton crop has started in Brazil. The rate of cotton is overall stable there while the rates of cotton were stable in Central Asian states while in India the rates of cotton decreased by Rs 800 per candy.
Mean While, Food minister was informed that cotton sowing was completed on over 84 percent or 1.96 million hectares out of 2.32 million hectares of cotton target area, with output target likely to be achieved this season.
Federal Minister for National Food Security and Research Syed Fakhar Imam chaired a meeting in this regard, where he took stock of the situation and reviewed input positions to discuss cotton intervention price, a statement said. The meeting was attended by senior officials of the Ministry of National Food Security and Research and representatives of all provincial ministries and allied departments.
The minister said that cotton output target was fixed at 10.51 million bales during the current season.
Representatives of the Agriculture Ministry of Sindh informed the meeting that due to shortage of irrigation water during the season, cotton sowing was not progressing fast, and stressed the need for taking measures to enhance area under cotton production. About 84 percent targets for the current season had so far been achieved and figures were expected to further increase during the coming days.
The meeting was apprised about cotton cultivation across the potential areas of all four provinces. Punjab has sowed over 1.35 million hectares against the set target of 1.6 million hectares, while Sindh has sowed 0.533 million hectares out of its set target of 0.64 million hectares during the current crop sowing season.
The minister said that the government was taking measures to enhance productivity of all major crops including cotton to achieve sustainable economic development and social prosperity.
Secretary Agriculture South Punjab Saqib Ali said that cotton will be cultivated on 34 lac acers in Punjab while process of sowing of cotton is completed on 31 lac acers. He expressed these views during his meeting with a delegation headed by convener of standing committee on cotton of FPCCI Malik Talat Sohail. Saqib said that all the agencies of the Department of Agriculture are engaged in the field in connection with the awareness campaign for the farmers and are encouraging the farmers not to use any pesticides for 90 days after sowing of cotton this will decrease their production cost. He also said that so far the cotton crop is much better and it can be hoped that much better production will be achieved this year.
Meanwhile, the Value Added Textile Association has said that the government should announce a concessional package for textile exporters. The non-implementation of the textile policy 2020-25 is worrisome.
The value-added textile exports associations in their budget proposals have demanded the federal government to restore zero-rating, continue duty drawback of taxes (DDT) and Technology Up-gradation Fund (TUF) scheme, and to lower final tax and withholding tax in Budget 2021-22.
The associations demanded to reduce WHT rate to 0.5 percent, to suspend Export Development Fund (EDF) surcharge, and to reduce and fix tariffs of electricity in the forthcoming budget.
According to the budget proposals submitted to the federal government wherein the top demand was to restore zero rating on GST “No Payment No Refund Regime” through revival of SRO 1125 in letter and spirit. The demand was made because SME exporters have been closed down and decreased by 30 percent as compared to last year due to imposition of 17 percent GST, which blocked precious liquidity.
Meanwhile, chairman Pakistan Cotton Ginners Association Dr Jasu Mal while addressing to the ginners of Hyderabad and Sanghar said that there was a record decline in the production of cotton for the last three years. Unfortunately, the production decreased from fifteen million bales to five million bales. He said that why we have to import cotton from abroad to fulfill our textile sector needs.
The government has increased the sales tax from 10% to 17% due to which the profit margin of the farmers will decrease.
Jasu Mal said that farmers are opting for other crops due to rising costs of cotton cultivation. He demanded that government should withdraw tax on ginners instead of increasing its ratio so that the ratio of profit of farmers increased and cost decreased. He said that 60% of Pakistan’s imports are based on textile products and the requirement was met in the past by cotton cultivation at the national level but now it is imported from abroad. He requested the federal government to abolish sales tax on cotton at ginner’s level so that we can increase cotton production and we do not have to import cotton from abroad. He also said that 17% sales tax has been imposed on Banola oil in the budget which will not only increase the price of edible oil but also reduce the profit of the farmers.
Jasu Mal further said that five years ago there were thirteen hundred ginning factories in the country which has now reduced to 440. He showed his apprehension that if the federal government did not abolish sales tax on cotton ginners and cottonseed oil in the budget proposals, the cotton crop in the country would be completely wiped out. He said that if the country ran out of cotton, billions of rupees would be spent on the import of cotton, which will be great loss to the country economically.
Copyright Business Recorder, 2021
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