KARACHI: A bullish trend prevailed in the cotton market. To keep the cotton prices stable, Trading Corporation of Pakistan (TCP) will buy cotton on government fixed rate. The APTMA has demanded of the government to fix electricity rates separately for export industries.
However, there is a plan of an agricultural revolution under the supervision of the army, which will prove to be an important milestone in national economy. It will also be beneficial for the future of cotton crop in the country.
Separately, Lahore High Court (LHC) has rejected a stay order of textile sector on energy tariff.
An increase of Rs 400 per maund in the price of cotton was witnessed in the local cotton market previous week. Textile mills continued to purchase cotton, while the ginners also continued to sell large quantities of cotton due to better supply of Phutti. Resultantly, the business volume improved considerably.
Although the government has asked the ginners to buy Phutti from cotton farmers at the rate of Rs 8500 per 40 kg but ginners say that if the government takes cotton and Banola from them on this rate they are ready to buy Phutti from the farmers on the intervention rate announced by the government.
Sources said that last week the government had threatened to take action against the ginners for not buying cotton on official rates, due to which the ginners had also staged a symbolic strike, but due to the extraordinary increase in supply of Phutti, both farmers and traders were compelled to sell Phutti at lower prices. The ginners are now running ginning factories and the business is booming.
Sources said that the government is assuring the cotton farmers that it is developing a strategy to buy cotton at the intervention price set by the government through TCP. However, even if the government formulates a strategy to start procurement of cotton through TCP, its implementation will take some time.
However, Pakistan Cotton Ginners Association Chairman Chaudhry Waheed Arshad is continuously working with the agriculture departments and the federal ministers of Finance and Agriculture to resolve the issues of the ginners.
On the other hand, due to lack of attention from the government, the problems of the textile sector of the country are getting worse with every passing day, especially the issues of energy and higher interest rate. Moreover, the crisis of textile products in the growing local and international markets as well as textile sector is facing huge financial crisis.
At present, there is positive news regarding cotton production. Already, in the first picking, 15 to 20 maunds of Phutti per acre is being harvested. Looking at this, it can be said that if the weather conditions remained favourable, the production of cotton will exceed one Crore bales.
The rate of cotton in Sindh is in between Rs 17,200 to Rs 17,400 per maund. The rate of Phutti is in between Rs 7,000 to Rs 7,400 per 40 kg. The rate of cotton in Punjab is in between Rs 17,600 to Rs 17,800 per maund while the rate of Phutti is in between Rs 7,200 to Rs 8,300 per 40 kg. The rate of cotton in Balochistan is in between Rs 17,200 to Rs 17,300 per maund and the rate of Phutti is in between Rs 7,200 to Rs 7,700 per 40 kg. The rate of Banola, Khal and oil is relatively stable. The Spot Rate Committee of the Karachi Cotton Association kept the rate of cotton unchanged at Rs 17,000 per maund.
Karachi Cotton Brokers Forum Chairman Naseem Usman said that the price of cotton remained stable in the international cotton market. According to the USDA’s weekly export and sales report for the year 2022-23, 23,100 bales were sold.
Bangladesh was at the top by buying 18, 200 bales. Vietnam was second with 5,600 bales. Honduras was third with 3,200 bales. Taiwan bought 2,000 bales and ranked fourth. Turkey bought 1,900 bales and stood at the fifth place. Pakistan bought 6,600 bales and stood at the sixth position. As many as 51,000 bales were sold for the year 2023-24. China was at the top by buying 36,000 bales. Honduras was second with 9,800 bales. Pakistan bought 2,500 bales and stood at the third position.
However, Secretary Agriculture Punjab Iftikhar Ali Sahoo reiterated on Friday that the federal government has issued directives to the Trading Corporation of Pakistan (TCP) to immediately start purchasing cotton to ensure a price of Rs 8500 per maund to the growers.
He was speaking at a divisional review meeting at Multan which was also attended by the Secretary of Agriculture Southern Punjab Saqib Ali Ateel and other high-ups. During the briefing, the Secretary was informed that the department had confiscated fake pesticides worth Rs 137.5 million in the Multan division since January 01, 2023 and legal action is also being taken against those involved in this heinous crime. Secretary Agriculture directed to accelerate of the campaign against fake pesticides and register cases against those involved in this business under the MPO act.
The meeting was also informed that 28 ginning factories were working in the Multan division, and picking of early sown cotton is under way. The Secretary directed all the ginning factories to make a daily report of the arrival of cotton in their factories, stock position and quality of the crop.
DG Agriculture (Pest Warning) Punjab Rana Faqeer Ahmad said that the overall health of the cotton crop in Multan Division was good but an attack of white fly had been witnessed in Khanewal, Mian Channu and Vehari while Thrips attack had been observed in Lodhran. However, this attack was still below the economic threshold.
Regarding the energy tariff, Pakistan is competing with the mills of India, Bangladesh and Vietnam to export textile products. Now a unit of electricity in these countries costs just 7 to 9 cents.
The textile Industry has asked the government to allocate a separate power tariff category for the export industry by excluding cross-subsidies, stranded costs, and inflated system losses for achieving an exports target of $50 billion in next 4 years.
All Pakistan Textile Mills Association (APTMA) came up with this demand in a letter written to the secretary of the Commerce ministry Muhammad Sualeh Ahmad Faruqqui.
The letter mentioned that Finance Minister Senator Ishaq Dar had showed commitment in support of the proposal of the separate tariff category for the exporters pitched by the textile industry in a meeting held on July 10, 2023.
The proposal, which has also been annexed with the letter written to the secretary of Commerce, is based on 2Es—electricity and exports arguing that the higher the energy cost lower will be the exports as 30-40pc of conversion costs in the textile sector are energy.
APTMA argued that cross-subsidy, stranded costs, inefficiencies, and excess transmission and distribution losses couldn’t be exported and the components in the energy tariff rendered exports uncompetitive. “The solution is that special power tariff category for exporters should be extended to the export sector, which judiciously excludes cross-subsidies and stranded costs, while accurately incorporating actual T&D losses for B-3 and B-4 categories,” the letter read.
According to APTMA, the cost of the cross-subsidies, stranded costs, and excess T&D Loss will have to be spread over other consumer categories. And if the costs are spread to consumers other than lifeline consumers/domestic, it will cause an increase in the tariff by Rs3.7/kWh which could be recovered by efficiency gains in the distribution margins of the DISCOs.
The present amount of receivables ending 2022-23 are in the vicinity of Rs2.5 trillion and even a small thrust in recovery can yield 10 percent of the amount as extra collection during the current fiscal and which can add Rs250 billion to the kitty.
APTMA in the letter argued that the government could easily save a huge amount of Rs615 billion, which includes Rs40 billion a year through efficiency in the distribution margin, Rs250 billion through efficiency against recovery losses, and Rs250 billion by enhancing recovery against the defaulters, and Rs15 billion through saving against the expenditure of SAP (system augmentation programme) and Rs10 billion loss could be saved, which incur due to inordinate damage to distribution transformers and Rs50 billion could be harnessed by saving against inordinate bill adjustments.
The inordinate number of bill adjustments is a serious bane for the sector, which needs a strict audit as in most cases the amounts are adjusted while energy/unit remain in the books. Adjustments worth billions of rupees are made by the DISCOs while strict vigilance can lead to savings of at least Rs50 billion in a particular financial year.
The action plan of revolutionizing the agriculture sector under the leadership of the army and reforming the agriculture sector on modern lines away from the traditional methods of farming is very wonderful, which will prove to be an important milestone in the country’s economy, said Sajid Mahmood, head of the Department of Transfer of Agriculture Technology Central Cotton Research Institute Multan in its statement.
He said that the Land Information and Management System (LIMS) has been developed by the Pakistan Army to promote modern methods of farming.
The commencement of work on several projects using new agricultural technology along the lines will be a very welcome milestone for the development of agriculture as well as it will increase productivity.
Under this project, 3 billion dollars will be invested in the agriculture sector. This project has been implemented under the supervision of the Director General Strategic Projects of the Pakistan Army.
According to reports, 44 lac acres of land has been identified across the country for implementation of agricultural projects. In this, 13 lac acres of Punjab, 13 lac acres of Sindh, 11 lac acres of Khyber Pakhtunkhwa, while 7 lac acres of land is in Balochistan. While eight lac and twenty four thousand and seven hundred and twenty eight acres of land have been digitized in Punjab, on which modern farming should be done. This will increase the yield of cotton like other agricultural products.
Copyright Business Recorder, 2023
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