Sampling offers not made in time: Cotton ginners lose over 50 percent contracts

Ginners lost over 50 percent cotton contracts, signed with the Trading Corporation of Pakistan (TCP), after they failed to ensure sampling offers on time.
Sources told Business Recorder on Tuesday that the TCP had signed cotton procurement contracts with ginners for 15 days and during the period cotton ginners were required to present/offer stocks for sampling to examine and further process the agreements. However, majority of the ginners failed to offer cotton stocks during the agreed period.
Following a bumper cotton crop and slow sales, cotton prices in the domestic market were on decline as they reached 5-year lowest level of Rs 5,100-5,200 per maund in November. Therefore, in order to support growers, the federal government decided to procure cotton to stabilise prices in the domestic market and accordingly, the TCP was given a task to intervene in the market and procure cotton at Rs 6,864 per maund.
The TCP started procurement in the second week of November and later stopped procurement in the third week, when the federal government suddenly restricted the Corporation from further procurement. In order to ensure quality, the TCP decided to conduct multiple examinations/evaluations. Classers from Pakistan Cotton Scientific Institute (PCSI) were appointed for initial testing of cotton at the all 10 procurement centers. While, it was decided that final testing will be held at the time of delivery and a three-member committee that will have representatives from, PCSI, TCP and Pakistan Cotton Ginners Association will conduct the final examination of the procured cotton for 85 percent payment.
According to sources, overall, the TCP finalised procurement contracts for 390,800 bales till November 18 for a period of 15 days, in which ginners/sellers were required to offer stocks for sampling to check the commodity quality to mature the deal. The TCP asked all ginners to present their offered stocks till December 3, 2014 for sampling however a large number of ginners have failed to present stocks during the agreed period, resultantly more than 50 percent or some 0.2 million bales contacts, singed between TCP and cotton ginners, have lapsed as the selling party failed to fulfil the contract's condition of offering stock.
"Out of 390,800 bales, some 186,000 bales have been sampled so far by the TCP, while contracts for the remaining some 204,000 have expired," a TCP official said. He said TCP has stopped further sampling of cotton as they (ginners) failed to present stocks on time. There are a few hundred bales, sampling of which was delayed by the TCP and left for examination, he maintained.
"Several samples have also been rejected by the classers, appointed by the TCP for quality examination. During the inspection/examination some 64,700 bales have not been accepted by the Corporation on quality grounds," he added. Lowest quality cotton was found in Vehari as not a single contract was matured there due to poor quality cotton. According to sources, all the contracts (7,200 bales) of Vehari have been rejected by the Corporation. The classers, responsible for quality inspection, also rejected some 11,700 bales from Multan, 4,100 from Sahiwal, 12,600 from Bahawalpur, 11,400 from D G Khan, 3,900 from R Y Khan, 700 from Sukkur, 6,200 from Nawabshah, 1,200 from Mirpurkhas and 5,700 bales from Hala.
In addition, some samples of 71,400 cotton bales have been approved for procurement. So far, TCP has accepted some 9,900 bales from Multan, 700 from Sahiwal, 5,900 from Bahawalpur, 21,300 from D G Khan, 2,200 from R Y Khan, 23,500 from Sukkur, 2,900 from Nawabshah, 1,500 from Nawabshah and 3,500 bales from Hala.