ISLAMABAD: The National Assembly Standing Committee on National Food Security and Research was informed on Wednesday about a sharp decline in cotton cess collection, which has plunged from Rs631.72 million in 2014-15 to just Rs211 million in 2023-24.
Yousaf Zafer, Vice President of the Pakistan Central Cotton Committee (PCCC), briefed the committee, explaining that the drop in cess revenue has severely impacted the cotton research programmes, which are now facing significant financial strain.
Zafer attributed the shortfall to the non-payment of cotton cess by a majority of textile mills, with outstanding liabilities now exceeding Rs3.44 billion.
He noted that the cess rate has not been revised since 2012, further compounding the financial challenges faced by the PCCC.
“Due to a decrease in cess collection and limited financial resources, the PCCC’s research program has been badly affected,” Zafer told the committee.
He also highlighted that many major textile mills are refusing to pay cess on both domestic and imported cotton, citing ongoing litigation. Currently, cess collection is limited to a few mills, while a large number of mills continue to evade payments.
He further said that the Supreme Court’s judgment in 2019 and the Lahore High Court (LHC) in 2023 confirmed that PCCC is entitled to collect cess on imported cotton under the Cotton Cess Act 1923 as the word “Consumption” is written in the Act.
Thus, there is no need for Federal Board of Revenue (FBR) or Customs involvement, and cess collection on imported cotton is not contingent on any import requirements, he said, adding that the mills that fail to submit monthly cess returns by the 7th of each month are classified as “Defaulters” and average consumption is calculated as a 30 percent increase per annum.
However, an official from the All-Pakistan Textile Mills Association (APTMA) disputed the figures presented by the PCCC, claiming the amount of pending liabilities was overstated.
The APTMA representative argued that the actual arrears total no more than Rs700-800 million, and once again called on the PCCC to obtain accurate data from the FBR.
The APTMA and the PCGA emphasise the need for pro-farmer policies, increased investment in agricultural research, and improved infrastructure, while stressing the importance of coordinated action among all stakeholders, including the government, to ensure sustainable growth in the cotton industry and strengthen its contribution to Pakistan’s economy.
The APTMA representative stressed the introduction of an improved, genetically modified and certified seed system.
Restructure variety approval system to speed up the process as well as to support private sector research and development organisations, he said, adding that measures should be taken on emergency basis in cotton research including variety, high productivity and desirable fiber traits.
The committee chairman directed the secretary of the Ministry of National Food Security and Research (MNFS&R) to compile a comprehensive report that includes practical and actionable recommendations based on input from all relevant stakeholders.
The committee also agreed to invite representatives from the Ministry of Finance, Ministry of Energy, FBR, and provincial governments to address the pressing challenges facing the cotton sector. The role of agriculture extension programmes was also highlighted as critical, with the committee calling on provincial agriculture departments to prioritise these programmes.
Ali Tahir, secretary of MNFS&R told the committee that during 2023-24 Pakistan’s cotton import bill was $1.8 billion and in the current year Pakistan will be the largest cotton importer.
Pakistan Kissan Ittehad (PKI) President Khalid Mehmood Khokhar also urged the committee to take effective steps to improve cotton research.
He noted that high production costs had led many farmers to stop cultivating cotton.
Khokhar also raised concerns about the high electricity tariffs for the agriculture sector, particularly for tube wells, which he said were a major financial burden on farmers.
Khokhar called for immediate action on wheat support prices, warning that delays could result in reduced wheat cultivation.
He also suggested that the government declare an agriculture emergency to address these challenges.
MNAs and members of the committee including Rasheed Ahmad Khan, Rana Muhammad Hayat Khan, Muhammad Mueen Watto, Chaudhary Iftikhar Nazir, Syed Javed Ali Shah Jillani, Zulfiqar Ali Behan, Syed Ayaz Ali Shah Sheerazi, MNA, Musarrat Asif Khawaja, MNA and Keso Mal Kheal Das as well as senior officials of MNFS&S also attended the meeting.
Copyright Business Recorder, 2024
The article, originally published on November 14, 2024, was updated on November 18, 2024 to rectify an error in the opening paragraph. The error is regretted, and has been rectified.
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