KARACHI: The decline in cotton prices continued during the previous week. Business volume is extremely low. The textile sector is facing a severe crisis. There is a huge slump in the demand and prices of cotton yarn and products, leading to an unbearable financial crisis. Rising energy costs and high interest rates have made production costs unbearable.
The next cotton season will start from the coming month. Without a positive policy, the government’s intervention in fixing prices is a deception, causing billions of rupees in losses to farmers. The cotton farmers complained that last year, they were also betrayed. What is the benefit of such intervention when it causes billions of rupees in losses to farmers instead of benefiting them, they ask.
In the local cotton market, the element of decline in cotton prices remained dominant during the last week. Business volume is extremely low as the cotton season has come to an end. Spinners have a limited amount of cotton stock, and textile mills are also relatively not active because there is no satisfactory situation for cotton yarn and textile products. The market is experiencing a huge slump, and the financial crisis is going to be unbearable.
The crisis is said to be intensifying due to the government’s negligence towards the textile sector.
The massive increase in energy costs and the highest interest rates have resulted in a significant increase in production costs, making it difficult to run industries. Sources in business circles are predicting that the crisis will worsen in the coming days, which will further increase the uncertainty.
Due to the severe crisis in the textile sector, many mills are selling purchased cotton, but there is a lack of buyers. Meanwhile, many mills already have a stock of cotton, and on the other hand, the stock of cotton yarn and textile products is piling up, on which the interest rate is increasing.
The Federal Committee on Agriculture (FCA) has set a production target of one Crore and eight lac bales of cotton for the next season.
The price of cotton in Sindh and Punjab provinces is between Rs 19,500 to Rs 20,500 per maund.
The Spot Rate Committee of the Karachi Cotton Association reduced the spot rate by Rs 300 per maund and was available at Rs 19,700 per maund.
Chairman of the Karachi Cotton Brokers Forum, Naseem Usman, informed that there is a declining trend in cotton prices in international cotton markets. The price of New York cotton futures per pound remained between 75 and 78 American cents.
According to the US Department of Agriculture’s weekly sales report for 2023- 2024, a total of 97,400 bales of cotton were sold. Vietnam bought 29,600 bales, Pakistan purchased 17,400 bales, China bought 15,000 bales, India purchased 71,000 bales, and Bangladesh bought 6,300 bales. For the week ending March 25, 2024, a total of 34,400 bales were sold. Vietnam bought 9,200 bales, Turkey purchased 7,500 bales, Mexico bought 5,400 bales, Pakistan purchased 4,400 bales, and Ecuador bought 4,400 bales.
The current provincial government of Punjab is determined to revive Southern Punjab as a hub for cotton production, offering various incentives to growers and aiming at bringing at least 4 million acres of land under cotton cultivation.
This year, the province has set a production target of 6.5 million bales of cotton, and the government is mobilising all available resources to achieve this goal. During the last season, the province achieved production of 6.028 million bales and also brought 4.125 million acres of land under cotton cultivation.
Syed Ashiq Hussain Kirmani, Punjab’s Minister for Agriculture, expressed these intentions during the third review meeting on cotton crops, which took place at Muhammad Nawaz Sharif Agricultural University in Multan. Secretary of Agriculture, Punjab, Iftikhar Ali Sahoo, along with Provincial Assembly members Rana Muhammad Salim and Chaudhry Zia-ul-Rehman, participated in the meeting.
The minister emphasised that Chief Minister Punjab Maryam Nawaz Sharif was committed to revitalizing the province’s cotton industry. He asserted that the current government was resolute in transforming Southern Punjab back into a flourishing cotton-producing region, highlighting the critical role of cotton in bolstering the country’s economy. He said various projects have already been initiated to usher in a green revolution across the province.
The minister stressed the importance of a zero-tolerance policy against counterfeit fertilisers and agricultural pesticides, advocating for stringent monitoring to ensure the availability of high-quality agricultural inputs at regulated prices. Additionally, he called for the field staff of the Agriculture (Extension) and Pest Warning departments to submit a monthly schedule of their visits for proper monitoring. Adequate water supply from canals is being ensured in cotton cultivation areas.
Sahoo underscored the need to enhance ongoing activities to assist farmers in achieving their cotton cultivation and production targets. He emphasised the regular convening of Divisional and District Advisory Committees and the issuance of technical advisories based on consultations with experts and stakeholders. Furthermore, he encouraged the private sector to guide farmers according to the technical guidance provided by the Agriculture Department.
Meanwhile, a meeting convened by Agriculture Minister Syed Ashiq Husain Kirmani was held recently to address concerns pertaining to the revival of the cotton industry and the challenges faced by ginners.
In attendance were prominent figures such as Chairman PCGA Waheed Arshad, along with other PCGA leaders including Sohail Haral and Malik Talat Sohail.
During the deliberations, Sohail raised pertinent concerns of the ginners, which were duly acknowledged by the minister.
Encouragingly, the minister expressed a commitment to resolving these issues. Overall, the meeting proved to be fruitful and marks a significant step towards mitigating the challenges encountered within the cotton industry on a daily basis.
Furthermore, Major Muhammad Kashif (Retd), Chairman of the Pakistan Cotton Brokers Association (PCBA), has said that the upcoming cotton season is likely to be disappointing for farmers due to the government’s lack of interest, weak economic policies, and the incompetence of cotton officials. This sector, which supports more than 60% of Pakistan’s population, is currently in a state of extreme distress. Our textile industry is almost on the verge of collapse, and many textile mills are either closing down or forced to reduce their shifts. The reasons include expensive electricity, higher interest rates, the absence of a textile policy, and an unnecessary burden of taxes, along with expensive raw materials. As a result, no one is willing to invest in this sector.
Meanwhile, due to the significant decline in the international cotton market, imported cotton including Afghani cotton is available at a lower rate. Moreover, yarn rates and demand have also decreased, resulting in disappointing business conditions. As a result, the advance cotton deals that were expected to be around 21,500 to 22,000 now seem like a distant dream.
After advance deals, the flow of cotton will improve, and it is expected that trading in cotton market will be in between Rs 17,000 to Rs 18,000 per maund, less than the previous rate. The delay in wheat harvesting due to rains will cause a delay of a few days in the next crop season. The cotton market will show its true colours after June 15, i.e., Eid-ul-Azha.
The head of the Technology Transfer Department at the Central Cotton Research Institute, Multan, Sajid Mahmood, said in a special conversation regarding research and development for the promotion of cotton that the only way to achieve economic stability and get rid of foreign loans is to establish research and development standards in the agricultural sector, keeping in view the impacts of climate change on agriculture. If we talk about cotton, Pakistan has decreased from 14.4 million bales to 8-9 million bales today. It is very important to know the reasons for this. One of the major reasons is that the textile industry in Pakistan has not paid the cotton cess to the Pakistan Central Cotton Committee (PCCC), which is the country’s largest research institution, since 2017. On one hand, the textile industry is demanding a reduction in electricity prices from 17 cents to 9 cents, while on the other hand, on a roughly estimate the textile industry owners are defaulting on paying over 3 billion rupees in cotton cess to the PCCC. The industry is getting stay orders from courts on the cotton cess issue, but is not willing to provide any support to cotton research institutions, agricultural scientists, and farmers. Meanwhile, other major cotton-producing countries like India, China, the United States, and Brazil provide regular support to their cotton research institutions, including cotton cess and taxes, and provide all kinds of technical and training assistance, including breeding trials and programs, modern training for cotton researchers, incentives for their best performance, and upgrading of research institution laboratories.
Copyright Business Recorder, 2024
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