The government is likely to announce Rs 4000 per 40kg as the indicative price of Grade Three Cotton, aimed at luring farmers who opted for other crops due to better returns to grow cotton, well informed sources told Business Recorder. Cotton is a major cash crop and lifeline of the Pakistan''s economy. Over the years, the production of cotton has declined far below the national requirement, thus making way for import of raw cotton.
Last year''s production was 10.77 million bales against national requirement of around 13-14 million bales annually. The decline in production of cotton has been attributed to low returns to growers, higher cost of production and decline in the price of cotton at a critical time, and low yield and attack of virus and pests.
Ministry of National Food Security and Research in consultation with the provinces, has set up cotton production''s target for the year 2019-20 at 15 million bales. This enhanced target requires various interventions for ensuring reasonable return to the farmers to attract them to grow cotton.
According to sources, Agriculture Policy Institute (API), an attached organisation of Ministry of National Food Security and Research, has come up with cost of production of Rs 3173 and Rs 3495 per 40kg of seed cotton for provinces of Sindh and Punjab. The import and export parity prices of the cotton crop are Rs 4489 and Rs 3436 per 40kg respectively, as calculated by API.
Ministry of National Food Security and Research has had a number of meetings with the provincial governments, the growers, Pakistan Cotton Ginner''s Association (PCGA) and All Pakistan Textile Mills Association (APTMA) to discuss the issue of intervention price for cotton crop for the year 2019-20. The matter was discussed in the Standing Committees of Senate and National Assembly and also in the National Assembly''s Special Committee on Agriculture formed under the chairmanship of the speaker Assembly. National Assembly also passed a resolution to ".... set minimum support price for cotton to protect the local farmers and encourage cotton cultivation in the country". It was unanimously approved by all to announce a reasonable price of the crop based on cost of production, import and export parity prices to boost the production of next year''s crop. The only dissent was from APTMA as it did not support the announcement of intervention price.
Ministry of National Food Security and Research, considering all the factors, has proposed the following strategy of cotton crop based on the input of all the stakeholders: (i) an indicative price of Rs 4000 per 40kg for the base grade 3 with staple length 1 1?3, to be announced by the Government of Pakistan. Its linkage with quality/ grade has also been recommended. Pakistan Cotton Standard Institute (PCSI) is to be involved to ensure quality parameters; (ii) a review committee under the chair of Advisor Commerce and Textile to review the indicative price and other measures to be taken in case of abnormal lows and highs in the prices; and (iii) intervention by the TCP on the recommendation of Price Monitoring Committee has also been proposed.
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