KARACHI: The rate of cotton remained stable previous week amid improved business activities, though there was fluctuation in international cotton markets.
According to All Pakistan Textile Mills Association (APTMA) Finance minister has assured them to bring improvement in the textile sector.
An alarming decrease in cotton production of more than 25 lac bales is expected and 75 lac bales will have to be imported for local textile mills. At present, import contracts for about 55 lac bales have already been signed.
Among the cotton producing countries, Pakistan has now gone to the seventh place from the fourth.
Indus River System Authority (IRSA) has predicted water shortage for Kharif crop. Government should take steps to save crops from the effects of climate change.
In the local cotton market during the last week the rate of cotton remained stable. Some ginners were taking interest in buying due to the fluctuation in the rate of US dollar, as well as, due to the difficulties in opening Letters of Credit.
There is a stock of about three lac bales in the market; however most of this cotton is of low quality. The mills are buying cotton as per its quality. The business is mostly on credit basis as there is a financial crisis in the market.
The interest rate has been increased by the SBP by one percent and now it is at the highest level of 21 percent.
It has been very difficult to run the industry in such a situation when already there is a gas crisis - energy is available at Rs 45 per unit - besides non-payment of 18 percent of GST as sales tax refunds. Besides all this increase in the prices of inputs and huge financial crisis in the market, it has become more difficult to run the industry.
Business is already suffering a lot due to severe recession abroad, especially in the textile sector which is the highest foreign exchange earner and employment provider for the country.
Few year back when there was PML-N government the textile sector was in dire straits and the government was not paying attention to the textile industry. The then chairman of APTMA, Gohar Ijaz, in a meeting requested the then finance minister, Senator Ishaq Dar to save the destroyed textile industry of Faisalabad and Lahore.
This year too, the textile sector is in dire constraints and situation is even worse. Whole of the country depicts the picture of a graveyard for textile sector.
Due to the hue and cry of the textile sector, Finance Minister Ishaq Dar met a delegation led by Gohar Ijaz, the head of the textile sector, on Tuesday. The finance minister assured the delegation that the government would take positive steps to improve the textile sector.
Cotton is the key crop of the country, as apart from the textile sector, it has many benefits, such as oil, animal feed, etc., but it is sad to say that due to lack of attention from the government, there is a continuous shortage of cotton in the country. This year production of the cotton is forty nine lac bales which is the lowest in four decades.
There was a time that Pakistan was the second largest cotton producing country in the world. Later it was the fourth largest producer. However, this year Brazil, Australia and Turkey are ahead of us and our number has shamefully reduced to the seventh. If the negligence of the government continues then it is feared that our textile industry will be totally dependent on the imported cotton.
On the other hand, the sugar industry is affecting the cotton crop as the cultivating of sugarcane on cotton area is increasing day by day. The establishment of housing societies on agriculture land is also a big reason of the shortfall of cotton.
Meanwhile, cotton sowing has partially started in several cotton producing areas of Sindh province.
The rate of cotton in Sindh is in between Rs 17,000 to Rs 20,000 per maund. The rate of Phutti is in between Rs 6,000 to Rs 8,000 per 40 kg. The rate of cotton in Punjab is in between Rs 18,000 to Rs 20,000 per maund while the rate of Phutti is in between 6,500 to Rs 8,400 per 40 kg. However, the rate of Khal, Banola and oil remains stable.
The Spot Rate Committee of the Karachi Cotton Association increased the spot rate by Rs 600 per maund and closed it at Rs 19,300 per maund.
Chairman Karachi Cotton Brokers Forum Naseem Usman told that fluctuation was seen in the rate of cotton in the international cotton market.
According to USDA’s weekly export and sales report for the year 2022-23, one lac sixty thousand and five hundred bales were sold.
China was at the top by buying sixty four thousand and four hundred bales.
Vietnam was second with fifty thousand and five hundred bales. Turkey was at the third place with sixteen thousand and two hundred bales.
Fifteen thousand and nine hundred bales were sold for the year 2023-24.
Pakistan was at the top by buying ten thousand bales. Mexico was second by buying 3,600 bales and South Korea bought 1,800 bales and came third.
Besides, according to another report about threats to economy, 27% water shortage may be faced for the Kharif crop.
The report was presented in the meeting of the IRSA Advisory Committee which was held to review water availability for Kharif season.
However, the data gathered by Pakistan Cotton Ginners Association (PCGA) till March 31, 2023 shows that Pakistan produced 4,912,069 bales of cotton against 7,441,833 in the 2021-22 season, a year-on-year decline of 2,528,764 bales or 34pc loss.
The less output will eventually push the textile industry to import around 10 million bales. Mill consumption in the year 2022-23 has also been reported at 8.8m bales, the lowest in over 20 years, mainly because of severe import financing issues.
There are reports that the textile mills have so far inked import agreements for 5.5m bales, whereas they have purchased 4,605,449 bales from the local market. Last year, the mills had bought 7,332,000 bales from the domestic market.
According to ginners, they are still holding 301,720 bales in their stocks against last year’s inventory of 93,833 bales.
Interestingly, despite a strong demand in international markets, only 4,900 bales of white lint could be exported this year against the previous year’s figure of 11,000 bales, a fall of over 69pc.
Province-wise, Punjab registered over 32pc year-on-year decline in output as it produced 3,033,050 bales this season against 3,928,690 bales last season.
Sindh reported over 46pc year-on-year loss in yield as the lint production in the province this year stood at 1,879,019 bales against 3,513,143 bales last year.
Pakistan’s cotton output reached a high of 14.1m bales in the year 2004-05. But it dropped to 7mn bales in 2020-21 and about 9.45mn bales in 2021-22 as per acre yield in the country contracted drastically.
Naseem Usman, chairman of Karachi Cotton Brokers Forum, while commenting on the report, said that in some areas of Sindh, Balochistan and Punjab province, there was an extraordinary reduction in the crop due to the irreparable loss of the crop due to the devastating flood on the standing cotton crop. About 75 lac bales will have to be imported for the textile mills.
He said that due to climate change, cotton farmers are struggling to sow the cotton crop in the next season, about 85 thousand acres in some areas of South Punjab. But the cotton crop that had been sown has been damaged due to untimely rains.
Copyright Business Recorder, 2023
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