Weekly Review: Ginning to start next month as partial arrival of cotton begins

KARACHI: Partial arrival of the new season cotton crop has been reported. Some ginning factories will be partially operational from June 15. However, water crisis and extreme temperatures are affecting the crop. Fluctuations were seen in cotton prices in international cotton markets. There was recession in New York cotton market and a bullish trend in India.

There are concerns among ginners over 17 percent tax cotton products. Pakistan Cotton Ginners Association is active but still no progress is achieved. A seminar on cotton production technology was held. Pakistan Hosiery Manufacturers Association has warned that any ‘unwise’ decision would be disastrous for the economy.

During the last week, the arrival of new crop in the local cotton market was reported. The faces of farmers are glowing with happiness especially after the arrival of Phutti from the lower areas of Sindh.

Despite the water crisis and high temperatures, a strategy has been put in place to increase cotton cultivation as compared to the yield of last year. Irrigation water supply is increasing time to time.

Due to the extraordinary increase in the price of cotton in the local and international cotton markets, farmers are getting high prices of cotton. The rate of Phutti which has started arriving in market is in between Rs 9000 to Rs 10,000 per 40 Kg.

Some ginners believe that 2 to 3 ginning factories are expected to be partially operational by June 1 this year. It is expected that this year ginners will do business reluctantly because of high prices, and mills will also buy cotton, reluctantly.

However, the spinners, who need cotton in the beginning, will buy it at any price. In addition, the rate of the US dollar will be expected to remain stable. Further, the government has stopped the import of many items and has increased the import duties. This can also have some negative effect.

However, there is currently a small quantity of cotton available in the market, which is being demanded at exorbitant prices, due to which the business is sporadic.

The price of cotton in Sindh and Punjab is running at Rs. 21,000 to Rs 23000 per maund. There is some mill to mill business activity but it was not being reported

The spot rate committee of Karachi Cotton Association has kept the spot rate stable at Rs. 21000 per maund for the last two months.

Karachi Cotton Brokers Forum Chairman Naseem Usman told that the price of cotton in the international cotton markets is fluctuating. The rate of Future Trading of New York Cotton is in between 143 to 146 American cents per pound. However, in India an extraordinary increase was witnessed in the rate of cotton because the production of cotton in India is less than the initial estimates.

The government of India has abolished 11 per cent import duty on cotton till September 30, so that mills can get cotton on competitive rates. Despite that rate of cotton in India is increasing.

Indian textile mills are urging their government to immediately stop importing cotton. Recently, a meeting of textile and spinning mills and cotton business organizations was held in which 70 delegates participated.

Atul Ganatra, president of the Cotton Association of India (CAI), said in an interview that the meeting had requested the textile minister that several textile spinners said the government had abolished import duty on cotton by September 30. The date should be extended or permission should be granted till Bill of Landing as there are problems of shipment and containers all over the world at present. A special Cotton Advisory Board has been constituted for increasing the production of cotton headed by Suresh Kotak, a Cotton Expert.

According to the USDA’s Weekly Export and Sales Report, one lac ten thousand bales for the year 2021-22 were sold which is three percent more as compared to the figures of last week.

India topped the list with 34,100 bales. Vietnam came in second with 31,100 bales. Turkey came in third with 18,400 bales.

For the year 2022-23 more than 25,400 bales were sold.

India topped the list with 13,200 bales. Peru came in second with 4,600 bales. Guatemala came in third with 4,000 bales.

Meanwhile, Sindh agronomists, private sector, and agricultural academic researchers have stressed the need for more research in agriculture, saying that cotton production is declining due to climate change, water scarcity, and other reasons, and there is a need to check the quality of seeds and pesticides.

A mega seminar on “Cotton production technology” was organized under the auspices of Sindh Agriculture University in collaboration with Department of Agriculture, Government of Sindh and Engro Fertilizer Limited.

On the occasion, Dr Fateh Marri, Vice Chancellor, Sindh Agriculture University, said that given current climate change conditions, water scarcity, and other issues, new varieties of pure seeds and agricultural policies need to be improved.

He said that joint research projects with agricultural research institutes and the private sector could be worked out to solve the problems faced by the agricultural sector of the province.

Provincial Secretary of Agriculture Qazi Aijaz Mahesar said that due to climate change, the production of cotton has decreased by 50. The lack of pure seeds and less focus on the cotton crop have had a profound affect on Pakistan’s textile industry.

A progressive farmer, Syed Nadeem Shah, said asked for improvement in performance of the Sindh Seed Corporation. He said for ensuring supply pure of seeds there is a need to increase the agricultural research budget in Sindh.

Khusrau Nadir Gilani, Chief Commercial Officer, Engro Fertilizers Limited, said that due to rapid shortage of zinc in children in Pakistan, zinc has been introduced in food crops. He said that Egro Fertilizer has been standing with farmer community of Pakistan for the last 50 years.

Hidayatullah Chhajro, Director General Agricultural Extension, said that the experts of the Extension Department are working on various awareness programs and fieldwork to solve problems in the agricultural sector including seeds, fertilizers, and pesticides.

Owais Mushtaq Paracha of Engro Fertilizer, Muhammad Asif Ali, Naveed Alam Qureshi, Junaid Zubairi, Prof. Dr. Zahoor Hussain Soomro, Dr Ghulam Murtaza Jamro, Zulfiqar Ali Shah and others also addressed on the occasion.

Pro Vice Chancellor SAU Sub Campus Umerkot, Dr Jan Mohammad Marri, Director General Agriculture Research Sindh Noor Mohammad Baloch, Dr Qamaruddin Chachar, Dr Syed Ghiyasuddin Shah Rashdi, Dr Manzoor Ali Abro, Dr Inayatullah Rajpar, Registrar Ghulam Mohiyuddin Qureshi, and others attended the seminar.

Central Chairman of the Pakistan Hosiery Manufacturers & Exporters Association (PHMA) Shahzad Azam Khan on Thursday warned the PML-N led federal government that any “imprudent” decision to discontinue the concessional power tariff for five export-oriented sectors will be disastrous for the country’s economy.

The country’s textile, one of the five sectors, is boosting exports with prospects of 25 percent this fiscal year, but may see “damaging” effects if the concessional power tariff was ended, he added.

The textile sector topped with $15.4 billion exports in 2020-21 that is now going to surpass $15.98 billion mark in just 10 months of 2021-22, Central Chairman, PHMA, Shahzad Azam Khan said. Coordinator Jawed Bilwani, Zonal Vice Chairman (North) Kashif Zia, Zonal Vice Chairman (South) Abdul Rehman and members were also present during Executive Committee meeting.

The knitwear textile has also achieved the highest exports growth of $3.8 billion in 2020-21 and grows to $4.2 billion in the first 10 months of 2021-22, up by 35 percent.

The PHMA’s Executive Committee meeting discussed the current economic situation of the country and also passed resolution to make all-out efforts to help further augment the value-added textile exports to underpin the country’s ailing economy.

However, the PHMA has cautioned the federal government to avoid any “unwise” move may derail the growing exports.

It asked the prime minister and his economic team to ensure a level-playing field by providing concessional energy tariffs and Duty Drawback on Local Taxes and Levies as committed in the new five year textile and apparel policy.

The federal government should continue supporting the five export-oriented sectors for the country’s economic stability, employment creation and revenue generation.

The value-added textile exporters want continuation of grants by the government to provide concessional energy tariffs to ensure level-playing field to export industries for the purpose of regional competitiveness and export enhancement,” the Central Chairman PHMA said.

He said that the industries are also being burdened and cross-subsidized for gas tariffs to give subsidy to fertilizer and domestic sector.

“The fertilizer sector is earning huge profits in excess to subsidy amount nonetheless the benefit has not been passed on to growers in the name of food security,” he added.

Exporters have alerted the government regarding the negative impact on exports if concessional energy tariff was stopped. They demanded for provisions of concessional power tariff with additional budgetary allocations.

“With unviable cost of manufacturing, exports will suffer and the Prime Minister and his economic team shall be solely responsible for export decline and further depletion in forex reserves,” PHMA said.

The concessional energy tariffs should be sustained on an annual basis to help the textile exporters meet their commercial commitments made six months in advance to global buyers.

Any abrupt mid-year change or increase in power rates may leave the entire export sector jeopardized, it warned.

“The Commerce Ministry’s efforts must not go futile with any uncalled for intervention from any other ministry. Inter-ministerial harmony and cohesion must go on to support the national economic charter and export enhancement,” the PHMA said.

Copyright Business Recorder, 2022