Lack of pricing, standardisation system: Pak cotton fails to fetch good price in world market

Due to lack of quality-based pricing system and non-practising of the cotton standardisation system, Pakistani raw cotton is currently being traded at an average discount of 13 cents per pound in the international market, official sources revealed to Business Recorder. Analysis of the current price differential vis-à-vis international market (Cotlook index A) and Karachi Cotton Association (KCA) shows it is over 16 cents per pound for 13 million bales - total $780 million, hence this price loss would be manifold in value added textile goods, the officials maintained.
On July 14, 2015 the New York Cotton Market price stood at 72.50 cents per pound, at China Cotton Index it was 91.25 cents per pound, Indian Cotton Index it was 72.40 cents per pound, while in Pakistan it was 56.16 cents per pound which is equivalent to Rs 5,017 per 40-kg or Rs 4,700 per maund. However, this price may touch Rs 6,000 per maund if its quality is improved, they added.
Bing 4th largest cotton producing country, Pakistan cotton is considered as one of the most contaminated crop in the world. Exporters Guide by International Trade Centre categorises Pakistani cotton in Group III where 90-100 bales are contaminated with 20-100g of contaminants per ton. Pakistani cotton is hand picked with good colour, but due to dry and hot weather conditions in cotton region is still traded at lower prices and considered as most contaminated cotton. APTMA estimated over $1.4 billion loss due to cotton quality whereas National Textile University in a study estimated over $4 billion loss because of cotton contamination.
Pakistan's cotton is inheritably of good quality and a 6-year survey reveals that only 8-10 percent cotton fall in grade IV or below and over 90 percent in Grade III (Base grade) or better. If proper standardisation is followed, over 45 percent of Pakistani cotton would be traded at premium.
Cotton is traded on weight basis and farmers only cares about high yields and gives no attention to quality parameters and clean picking. Pickers on the other hand are paid for quantity of cotton picked in a day regardless of trash contents. Ginners mix high quality good and contaminated cotton to get a blend with moderate trash that loose its value. Textile mills have installed cleaning equipment in their mills and pay no attention for clean cotton production and standardisation, as they get cheapest cotton for spinning, and quality production can be met through import of quality cotton from India or other countries, but reluctant to pay extra for quality to Pakistani farmers.
The government has promulgated Cotton Standardisation Ordinance in 1994 and established Pakistan Cotton Standard Institute, framed rules and made necessary amendments in Cotton Control Ordinance 1966. The institute developed cotton standards for Pakistan and had them equalised/ synchronised with that of International (US and Liverpool) standards. The institute has proved in a pilot program from one district of Punjab, where Pakistan cotton was traded at premium in Cotlook A Index, which shows the system is perfect, but need commitment from the stakeholders (Ginners and Textile producers). It is further added cotton standardisation, if practiced, seed cotton price will be raised by Rs 900-1000 per maund in the country and public intervention may not be required to create a win-win situation.