The Pakistan Cotton Ginners' Association on last Saturday (the 18th October) released periodical cotton arrival and disposal data up to 15th October,08. According to this report, total arrival of seed-cotton is equivalent to 3.499 million running bales (Sindh 1.548 million bales and Punjab 1.950 million running bales) as against 2.713 million bales (Sindh 1.161 and Punjab 1.522 million local weight bales) same time last year.
Thus increase is 28.97 percent. (Sindh 33.32 percent and Punjab 25.67 percent). Of this, local spinning mills purchased 2.466 million bales (Last year 2.110 million bales) and exporters 125,100 bales (last year 37,700 bales). Total unsold stocks are 907,710 bales against 566,762 bales last year same time. This does not mean that final crop would be 29 percent more than that of last season. Crop movement differs from season to season on variety of reasons.
This season, Sindh received less rains and crop attained maturity somewhat earlier by two to three weeks. The ever high prices of seed-cotton to the extent of Rs 2200 per 40 Kg in Sindh in the early part of the season prompted the growers not to hold up seed-cotton but to deliver all to gins. In Punjab, seed-cotton equivalent of some 400,000 to 500,000 bales was harvested in exceptionally earlier in June and July months which increased production figures.
Cotton crop in middle of Sindh is said to be under the attack of Mealy-bug which not only reduces cotton out-put but also deteriorates its quality. Present position of cotton crop is said to be satisfactory and total out-put is expected between 11.5 and 12.0 million local weight bales against our last year's total production of 11.34 million running bales. This season Punjab province received more rains, which delayed crop maturity there.
However, in next couple of fortnights, crop position would become clear. Reportedly, Sindh agriculture minister has said that next year's production target would be 18.0 million bales. Apparently, it may be a political statement and may have very little relevance to reality.
The fears of abnormal shortage of irrigation water in coming years may be a cause of great concern for the nation. The costs of fertiliser specially DAP, pesticides, utility bills, labour and living have risen abnormally coupled with decreasing yield may negatively impact any increase in cotton production. The 12-hour load-shedding in upcountry would extend the ginning operation period and simultaneously increase cost of production. Besides, the system of announcing Minimum Support Price (MSP) for seed-cotton has been suspended for the last couple of years.
The prices of lint cotton have decreased by Rs 1000 from Rs 4,200 to 3,200 (-23.8 percent) and seed-cotton prices have decreased from Rs 2,200 to 1,600 per 40-Kg (-27.27 percent). On one hand production cost is increasing abnormally and selling cost of cotton is decreasing fast making cotton growing a failed business. How do we expect to increase our cotton productivity and production. Against our very poor performance, India has been increasing the size of its cotton crop year-on-year for the last four years continuously and in 2008-09, she expects to produce 31.3 million 170-Kg bales from 24.50 million 170-Kg bales in five years; increase 27.75 percent.
In last five years, China increased its production from 31.0 million 480-lb bales to 37.0 million bales; increase of 19.35 percent. In five years, Pakistan decreased its cotton crop from 14.45 million 170-Kg bales to 11.34 million bales in 2007-08 and in 2008-09 expectedly 11.5 million 170-Kg bales; decrease of 20.4 percent. Just see where we are going. It is a hard fact that unless we improve our agriculture system and increase our yields, our economy cannot sustain. Agriculture has been neglected for many decades and according to one report, in the last thirty years our population has increased by about 2.0 percent per year and agriculture production by about 1.0 percent per year.
Agriculture banks and other schedule banks have been advancing huge money running in scores of billions of rupees ostensibly to growers every year but results are negative. If we look at the whole system of advancing agriculture loans, we would find that the system is working against the interests of agriculture and the growers. Resultantly, growers are getting poorer and agriculture operation is losing its charm rather has become quite unviable. The governments, whether previous or present, whether political or non-political have spared no time to look at the increasing weakness of our agriculture and if the same state of affairs continued for some time, time will exhaust for the governments and the nation.
In the local market, cotton prices fluctuated widely mostly on international positive and negative reports. Last week, lint cotton was traded at the season's lowest rate of Rs 3,150 per maund but later recovered to close at the level of Rs 3,300 and 3,400 per maund of 37.324 Kg ex-gin. On New York cotton market, prices have also fluctuated widely in the last week; ruling December,08 contract touched the lowest of its life at 45.66 cents but later recovered and closed higher at US Cents 52.57 while distant March, 09 contract closed at US Cents 56.39/lb at the end of the week.
Actually, cotton prices under New York market, are also under direct influence of the deepening global crisis in finance, commodities and oil sectors. Defaults in performance of contracts cannot be avoided in such volatile situations internationally and locally. In Pakistan, impact of global crisis in financial sector has also been felt resulting in liquidity crunch. Taking cognisance of the situation, the State Bank of Pakistan has taken several corrective measures to ease down the liquidity crunch by pumping some Rs 270 billions into local banking sector to avoid any serious set back to our banking industry.
The serious weakness of Pak Rupee against US dollar which has reduced value of Pak currency to Rs 88 a US dollar and depleting foreign exchange reserves as low as below US dollars 8.0 billions are another threats to our economy. Pakistan economy is not export-oriented but import-oriented and our forex reserves may suffice us only less than two months. Pakistan's security, political and law and order situation is negatively affecting performance of our economic and agriculture sectors. In the near future, we do not see any improvement in the situation and all measures including short, medium and long terms would be required for providing real boost to cotton growing, marketing, manufacturing and exports.