The local textile and cotton industry which is moving in positive direction is badly affected by Corona virus. There were many challenges in the way of increasing the production of cotton. Steps should be taken for the immediate remediation of the challenges. Premiums have not been paid on quality in the last 70 years.
During the last week trading volume remained low due to the lack of interest by textile and spinning mills in the buying of cotton. Ginners are suffering due to the non-interest of millers in the purchase of cotton. Although, ginners had the limited stock of 4 lac bales out of which only 25 percent cotton is of good quality. However, purchase of cotton should be increased due to many reasons which include granting of GSP plus status by European Union for the export sector of the country for two years and increase in the price of dollar against rupees.
It is expected that due to the negative impact of Corona virus in China Pakistani exports is likely to increase as Americans and European importers will take interest in the buying of Pakistani textile products. The government has announced Rs 20 billion energy relief package for export oriented industry. It is also expected that bank interest rate will come down and extraordinary decrease in the prices of petroleum products world wide.
Moreover, Prime Minister Advisor on textile and Industry Abdul Razaq Dawood has hinted that government will abolish export duty on exports, while planning Minister Asad Umar also hinted out that prices of energy will come down. Advisor on finance Abdul Hafeez Sheikh has directed the Federal Board of Revenue to release Rs 15 billion of the exporters in two days. However, according to experts' negative effects of Corona virus has dispelled effects of all the positive factors due to which industry has started moving in right direction.
Another reason is that there is a tremendous fall in international markets. It's negative effects were seen on cotton trade especially bearish trend was witnessed in the Waday Ka Bhao (Rate of Promise) of New York Cotton which was at lowest level of 59 cent lowest than 60 cent. Due to its negative impact cotton prices in the world have dropped significantly.
According to the weekly report of USDA exports were increased by 22 percent as compared to last week. Pakistan has imported largest number of bales which is one lac sixty one thousand and six hundred. Despite that positive impact was not seen in the rate of New York Cotton due to which the local textile mills has adopted the policy of wait and see. Another reason is that due to extraordinary circumstances they are avoiding trading in cotton. However, due to the low production of cotton in the country textile sector has signed agreements for the import of 50 lac bales from abroad. The delivery of bales has started however there is a delay in shipments especially delivery of the bales imported from Afghanistan and Central Asia is stopped.
According to textile circles some mills has imported UNFIX cotton. Due to increase in the rate of dollar they had to pay more. In the local cotton market the rate of cotton according to the quality is in between Rs 7000 to Rs 9000 per maund while the rate of Phutti which is available in small quantity is in between Rs 2800 to Rs 4200 per 40 kg.
Due to rains in Punjab there was no business. The demand and rate of Khal has decreased as it is expected that production of grass and straw will increase as a result of heavy rains in Punjab. Many ginners were depressed who had stocked Khal in large quantity keeping in mind the increase of the prices of Khal. However, due to rains there is a delay in harvesting of wheat as a result of which it is expected that sowing of cotton will be delayed by two to three weeks.
The Spot Rate Committee of Karachi Cotton Association has decreased the rate of cotton by Rs 100 per maund and closed it at Rs 8900 per maund. Chairman Karachi Cotton Brokers Forum Naseem Usman told that unexpected bearish trend was witnessed in international markets. Due to the fear of decreasing prices many markets were partially closed. The business activities were badly affected.
However, due to the limited stock available by local ginners the rate of cotton was not decreased but it was stabled. It is understood that along with international market cotton market was under pressure. The Rate of Promise (Waday Ka Bhao) of New York Cotton was discussed above. Moreover, bearish trend was witnessed in other markets of the world which includes markets of Brazil, Africa and Central Asia. In China it is obvious that there was no business. The prices of cotton are decreasing in India although in India cotton cooperation was involved in buying and selling.
Prime Minister Imran Khan has approved the trade policy and textile policy 2020 to 2025 in principle. The government has enhanced the export target from 24 billion dollars to 46 billion dollars and the target of textile export has enhanced from 14 billion dollars to 28 billion dollars.
These views were expressed by Advisor on textile and trade Abdul Razaq Dawood during a media talk with journalists in Islamabad. He also said that according to Strategic Trade Policy Frame Work government will give incentives to 26 non traditional sectors.
Few days back a meeting of National Committees on Agriculture was held in Islamabad under the chair of President Dr Arif Alvi. While expressing his views during the meeting chairman Kashmir Committee and agriculture expert Syed Fakhr Imam said that agriculture sector had faced many Challenges in Pakistan.
He called for taking for the immediate remediation of the challenges. He especially talked about cotton and said the cotton is the most important crop of the country which was not given importance for the last many years. The important reason is that we had neglected seed research. In the world people were continuously involved in seed research. He termed lack of research in seed sector as a biggest challenge faced by our agriculture sector. Second reason is that we don't pay farmers according to the quality. Textile Mills and Sugar Mills don't pay to the farmers according to the quality of their products. We had fixed the same price of Stalien horse and an ordinary horse.
He also said that we don't go towards value added while Bangladesh which is not a cotton producing country has the textile exports of 40 billion dollars and Vietnam has the exports of 30 billion dollars. Imam said that in 1991 we produced one crore 28 lac bales of 170 maund, and Sindh had produced 14 lac bales. This year we produced only 85 lac bales of 158 maunds. He said our farmers are intelligent and hard working but they are not encouraged. There were the times when farmers were ready to buy bag of seed of worth Rs 6000 from two hundred miles. Farmers were ready to buy a bag of quality seed for Rs one lac.
Fakhr Imam welcomed that government had given a subsidy of Rs 400 on a bag of fertilizer and the price of wheat has been increased to Rs 144 per 40kg. Rice exports have risen from 2.5 billion dollars to 3 billion dollars. It is expected that it will increase more. According to the information importers of American and European textile products hinted that shipments may be suspended due to which local exporters are worried.
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