KARACHI: The cotton price remained stable during the previous week. The difference between demand and supply is causing an increase in the prices of cotton and Phutti. More ginning factories are starting their operations after increase in supply of Phutti.
All Pakistan Textile Mills Association (APTMA) has been decrying unfair competition, tariffs, and port congestion, but no solution is in sight. The government seems to be completely ignoring these issues.
Former President Sindh Abad Gar Board Syed Nadeem Shah has said that currently, the cotton crop in Sindh is satisfactory. However, there are some issues in Punjab.
Dr Yusuf Zafar, Vice President of the Pakistan Cotton Crop Committee (PCCC), has stated that the PCCC is facing a severe financial and administrative crisis, and various measures are being taken to address it. “We will soon rescue the PCCC from this crisis.” However, a delegation from the Pakistan Cotton Growers Association (PCGA) has met with Provincial Minister of Industry and Trade, Chaudhry Shafay Hussain to get resolved several taxes imposed on ginners.
The local cotton market witnessed a slight stabilisation in cotton prices over the past week. However, ginners are finding it challenging to fulfil their previous commitments, and new deals are being made at a slower pace with delayed deliveries.
Meaningful business transactions are expected to resume only after the Eid holidays. Although there is demand in the market, the supply of Phutti is limited, and its arrival is also limited.
Earlier, some deals were made in panic at a price of Rs 19,000 per maund, which has now increased by Rs 1,000 to Rs 1,500 per maund.
Only needy mills are trying to buy at this price because the international cotton price has also dropped significantly, leading mills to believe that the chances of a further price increase in the future are low.
The decline in international cotton prices has led mills to believe that there is no hope for a future price improvement. Moreover, the market is experiencing a severe financial crisis, and the demand for textile products and yarn is also very low. This is forcing mills to refrain from increasing prices. Experts believe that there is no factor driving the market towards a bullish trend.
The textile sector has already been facing a severe crisis, and the continuous increase in energy costs has resulted in a significant amount of tax refunds being stuck. Despite repeated appeals, the non-payment of competitive tariffs has severely affected the textile business. Several textile mills have shut down, while others are operating partially.
According to textile sources, if the government does not immediately address the problems faced by textile mills, more mills will be forced to close down.
In a recent press conference, Asif Inam, the central chairman of APTMA, said that that there is a need to revitalise the textile industry by demanding a reduction in electricity tariffs, a decrease in the interest rate to 2%, and the restoration of zero-rated facilities.
He emphasised that exports, investment, and employment opportunities are essential for contributing to the national economy and urged the government to take immediate action to address the issues facing the industry.
Currently, cotton cultivation in Sindh province is reported to be relatively satisfactory. In Sindh, the price of new season cotton is ranging from Rs 19,500 to Rs 21,000 per maund, while the price of Phutti is ranging from Rs 9,000 to Rs 10,500 per 40 kilograms.
In Punjab, the price of cotton is ranging from Rs 21,000 to Rs 21,500 per maund, while the price of Phutti is ranging from Rs 9,500 to Rs 10,500 per 40 kilograms. The Karachi Cotton Association’s Spot Rate Committee has closed the spot rate at Rs 19,700 per maund.
According to Karachi Cotton Brokers Forum Chairman Naseem Usman, the international cotton price is ranging from 73.50 to 75.50 American cents per pound.
According to the USDA’s weekly export and sales report, one lac thirty eight thousand and seven hundred bales were sold for the year 2023-24.
China is on number one after purchasing 71,700 bales. Pakistan purchased 28,200 bales and ranked second, and Vietnam purchased 25,100 bales and ranked third.
For the year 2024-25 fifty four thousand and one hundred bales were sold. Mexico after purchasing 28,700 bales, ranked first. Vietnam purchased 21,100 bales and ranked second, and South Korea af6 purchasing 3,300 bales, ranked third and after importing 2,200 bales, Pakistan ranked fourth.
Meanwhile, Syed Nadeem Shah, former Vice President of the Sindh Abadgar Board (SAB) and a farmer from Matiari, stated in a statement that the current cotton crop is satisfactory. Sowing has been completed in Lower Sindh and Middle Sindh, while in Upper Sindh sowing is left in some areas. The target has also been achieved. The position is so far so good, but availability of water is slightly scarce due to management and corruption issues.
In Punjab, the flood canals of Taunsa, Panjnad, Chashma, and Jhelum have been opened. The link canal is lifting 32-33 cusecs of water, while the rest is flowing into Sindh. However, there is mismanagement and corruption in this system, and the ‘might is right’ formula is being applied, he said.
He said when water flows from the Kotri Barrage our rotation system also starts working. Anyway, man proposes God disposes.
However, cotton picking has also started, and the momentum will gain pace soon. The recent heatwave had a tremendous combating effect on all crops, with positive impacts on mango yields. Mango trees that were not producing fruit earlier are now bearing fruit, and cotton growth is also excellent.
Besides, textile millers are demanding competitive tariffs.
The chairman of the All Pakistan Textile Mills Association (APTMA), Asif Inam, has demanded a reduction in electricity tariffs, a decrease in the interest rate and the restoration of zero-rated facilities. He emphasised that exports, investment, and employment opportunities are essential for contributing to the national economy. Addressing a press conference at the APTMA office in Lahore, Inam expressed regret that the textile industry is bearing a subsidy burden of Rs 240 billion and additional expenses of over Rs 150 billion. He stressed that providing electricity at 9 cents per unit would increase demand by over 300 megawatts and generate revenue of Rs 500 billion.
The chairman questioned the justification of a 22% interest rate when inflation had dropped to 11.8%. He pointed out that the government could save Rs 30 billion in interest payments by reducing the interest rate.
Regarding the demand for zero rating, he asked why the government was holding back refunds of Rs 300 billion sales tax claims of the industry. He suggested that the government should collect sales tax at the retail level, which has the potential to contribute over Rs 250 billion.
Moreover, APTMA stated that the Plant Protection Department has held up imported cotton at the Karachi port, and the Prime Minister should issue orders for its immediate release.
According to APTMA, the Plant Protection Department has kept imported cotton shipments stuck for 3-4 months, causing demurrage charges for industrialists.
APTMA claimed that foreign companies have already paid a penalty of Rs 5 Core, and cotton imports are being made from the USA and Brazil.
APTMA stated that importers are bringing in cotton under the license regime, while the DG Plant Protection is presenting unjustified grounds for investigation by Federal Investigation Agency.
The Vice President of the Pakistan Central Cotton Committee, Dr Yusuf Zafar, said during a meeting with agricultural scientists and other employees at the Central Cotton Research Institute in Multan that the PCCC is currently facing a severe financial and administrative crisis, and various measures are being taken to address it.
With the cooperation of the Ministry of National Food Security, all possible efforts will be made to resolve the issues and bring the PCCC out of the crisis. He said that negotiations with the central representatives of the All Pakistan Textile Mills Association (APTMA) would be initiated to resolve the long-standing issue of cotton cess payments.
It is hoped that the matter will be resolved soon through mutual understanding.
Dr Yusuf Zafar also announced that the federal government would allocate a significant amount in the upcoming budget for cotton research and development, which would increase cotton production in the country and strengthen the national economy.
He emphasised that agricultural scientists should work on new projects for cotton research and development, and any violation of discipline in the institution would not be tolerated. He directed that every PhD holder and agricultural scientist should start working on their respective projects immediately.
Dr Yusuf Zafar said that the PCCC would work on modern lines to restore its lost position.
A delegation of the Pakistan Cotton Ginners Association, led by Chairman Chaudhry Wajid Arshad, met with Provincial Minister of Industry and Trade Chaudhry Shafay Hussain in Lahore. They discussed issues related to excise tax on ginning factories, import duty on cotton seeds, ban on polythene bags, and other problems. The delegation demanded the establishment of a new industrial estate in Multan.
The Provincial Minister assured the delegation that the issues faced by ginning factories would be resolved on a priority basis.
Former Chairman Haji Muhammad Akram, Sohail Mahmood Harl, MD Pakistan Cotton Seed Corporation Saira Yunus, Senior Economic Advisor Javed Iqbal, Additional Secretary Commerce and other officials also attended the meeting.
Copyright Business Recorder, 2024
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