The Economic Co-ordination Committee (ECC) in its meeting next week will announce the support price of cotton at which the Trading Corporation of Pakistan (TCP) will purchase one million cotton bales with the objective of adjusting price of commodity.
The Chairman of Pakistan Cotton Ginners' Association (PCGA), Amanullah, told Business Recorder that on December 28 a meeting was held in the Capital, chaired by Textile Minister Shahabuddin. The meeting was attended by the representatives from Ministry of Finance, PCGA, TCP, cotton growers and All Pakistan Textile Mills Association (Aptma), and it decided that the ECC would announce cotton support price in its meeting next week.
"The main purpose of the meeting was to take opinions of all stakeholders about the price at which cotton should be purchased by TCP", Aman said. He said that, except Aptma, every stakeholder had supported purchase of cotton by TCP with the objective of adjusting the price of the commodity.
"PCGA told the Textile Minister that 11 million cotton bales have already arrived in the domestic market while almost 3 million bales have yet to arrive. Out of this 11 million bales that have arrived in the market, 0.7 million bales are un-ginned while 2 million bales are still in ginning factories. Therefore, there are almost 5 million cotton bales that Aptma has still to purchase", he added.
He dismissed the claims by Aptma that cotton growers were not going to get any financial benefit after the purchase of commodity by TCP. "During the meeting, cotton growers themselves supported the purchase of commodity by TCP. The growers proposed Rs 6000/maund support price of cotton," the PCGA chairman said. He said that even the Ministry of Finance and representatives of TCP did not have any objection to purchase of cotton as, according to TCP, it is ready to purchase one million bales within two days to adjust the price of the commodity, while the Ministry of Finance said that it would immediately release funds required for the purchase soon after it gets the directive from the Federal government in this regard.
When this scribe contacted Aptma Chairman Mohsin Aziz, he said: "Aptma emphasised this fact during the meeting that 94 percent cotton bales have already arrived in the market and the purchase of cotton by TCP would not provide any financial benefit to the growers, whereas it (the benefit) would go straight to cotton hoarders or ginners. Aptma is not involved in any sort of exploitation of the growers and the reduction of cotton prices in domestic market was just due to decrease of the commodity prices in the international market at that time. Cotton prices have decreased from $2.03/lb to 85 cents/lb. The ginners also have the facility to export, if they feel that in domestic market, the cotton prices are less than the cost of production."
He added, "We (Aptma) representatives do not want the government to intervene in the free market mechanism because it would give the cotton hoarders a free hand to exploit the domestic market." Karachi Cotton Brokers Forum Chairman Naseem Usman said that one factor was noticeable and that was that the government had directed the TCP to look into the matter, and prices of lint had stabilised and there is upward trend in the cotton market and there higher market anticipations that if the exporters showed interest in fresh buying, the prices may go up further in the near future.