KARACHI: Cotton prices were seen booming during the previous week. Over the past month, there has been a significant increase in the price of cotton by about Rs 4,000 per maund.
Business volume also remained positive, reflecting an overall boom in the international cotton market.
A US diplomat has discussed cooperation between the All Pakistan Textile Mills Association and the US regarding Pakistan’s cotton and textile sectors. The policy roadmap is ready for the textile industry, which will be shared with the coming government.
Director General of Agriculture Munir Ahmed Jumani has said that the government has allocated an area of 300 acres for a ‘garments city’ in Sindh.
To keep the cotton crop safe, measures should be taken to prevent pink bollworm and whitefly. He shared that the cotton cultivation area is decreasing because farmers are not getting a good price of cotton.
In the local cotton market, there was a notable increase in the price of cotton last week.
This upward trend in prices persisted due to the rise in international cotton prices. Additionally, stocks are dwindling, with major textile groups acquiring quality cotton.
Major groups were importing cotton when the rate of Future Trading of the New York cotton was 79 to 81 cents per pound.
However, as New York cotton rose to about 5.50 to 6 US cents, export contracts eased, and instead local cotton demand went increased.
Due to the increased purchase of textile mills, the price of cotton has sharply risen over the past week, particularly since the beginning of this month. It has surged by Rs. 3,000 to Rs. 4,000 per maund, depending on the quality.
Previously, the price of cotton in Sindh was in between Rs 15,500 to Rs 17,800 per maund.
In the province of Punjab the price of cotton is in between Rs 16,500 to Rs 17,000 per maund marking an increase of about 4,000 rupees. Currently, the spot rate stands at Rs. 19,700, reflecting a rise of Rs. 2,700.
Despite the rise in cotton prices, the business volume has also improved. One of the primary reasons for the increase in the price of cotton is the repercussion of the government’s announcement to reduce energy costs from 14 to 9 US cents, and Pakistan’s GSP+ status has been reinstated until 2027.
Heimtextil exhibition in Germany has remained relatively optimistic. New monetary policy will also be addressed by the State Bank of Pakistan on January 29.
Regarding the cotton season, especially in the lower areas of Sindh province, it is expected that there will be more sowing of Agiti cotton, while cotton is being sown through tunnel farming in many areas of Punjab. This method is relatively better, and the rates are also reasonable.
This season, the country’s cotton production is expected to be around 84 lac bales, while the requirement of textile mills is around one Crore thirty lac bales. About 10 lakh bales from foreign countries will be required as the import contracts from last year, totalling about 15 lakh bales, are to be fulfilled. Additionally, about 8 lakh bales will be imported from Afghanistan.
Afghanistan’s Torkham border is now opened after being closed for 10 days, while the Chaman border has been closed for the past three months. It is hoped that it will also be opened soon.
The Spot Rate Committee of the Karachi Cotton Association increased the spot rate by Rs.700 and maintained it at Rs.19,700 per maund.
Naseem Usman, Chairman of Karachi Cotton Brokers Forum, said that there is an upward trend in the price of international cotton, especially the New York cotton futures price, which closed at 84.37 US cents after rising to 85.54 cents. According to the USDA’s weekly export and sales report, 207,000 bales were sold for the year 2023-24. China was at the top by buying 103,300 bales.
Vietnam was second with 33,800 bales. Bangladesh bought 21,700 bales and stood at the third position. Pakistan bought 15,100 bales and took the fourth position.
In a recent meeting, Kristin K Hawkins, the United States Consul General in Lahore, engaged in discussions with the All Pakistan Textile Mills Association (APTMA) to enhance trade and economic ties between Pakistan and the United States.
Leaders from APTMA, including Kamran Arshad, Chairman Northern Zone, and Ahmad Shafi, Vice Chairman, warmly welcomed the US consul general.
The talks focused on collaboration in the cotton and textile sector, with a broader aim of expanding trade and investment relations. Concerns were raised about Pakistan’s declining domestic cotton production, underscoring the need to import over three million bales this year.
The USA, a major cotton supplier to Pakistan, is expected to contribute to textile production worth $ 8 billion, primarily for export to the US.
Kamran Arshad stressed the critical role of the textile industry, constituting 62% of total exports. He proposed a mechanism for importing US cotton under GSM-102, with Pakistan’s textile export proceeds serving as collateral.
Highlighting the strength of the textile industry in Pakistan, Arshad termed the US as Pakistan’s largest trade partner, with bilateral trade reaching USD 9.85 billion in 2021-22.
APTMA advocated for stronger US-Pakistan cotton linkages, promoting technology transfer for high-yielding cotton seed. They emphasised the importance of joint ventures and collaboration between Pakistani and US investors.
They urged to explore avenues for economic collaboration, saying these discussions aim to bolster the textile industry, strengthen bilateral trade, and pave the way for sustained economic growth.
The country’s textile industry has drawn up a policy roadmap for the post-election government that aims to increase textile exports to $50 billion by 2029 and create a competitive Trade Bilateral Contracts Market (CTBCM).
They are pushing for a future system to ensure B2B power contracts with a wheeling charge of 1-1.5 cents per unit while increasing the solar net metering limit for industrial customers from 1MW to 5MW.
In an ambitious effort to revitalise the country’s textile industry, the Sindh government has embarked on a project of a Karachi Garment City.
The industrial estate, which is dedicated to manufacturing value-added textile products, is spread over 300 acres and is about to undergo a major transformation. The initiative aims to promote the development of climate-friendly industrial units and water treatment plants within the proposed city.
However, addressing a seminar organized by WWF and the Sindh Agriculture Department regarding the cotton crop in Hyderabad on Thursday, Sindh Director General of Agriculture (DG) Munir Ahmad Jamani said that the cotton crop is the backbone of Pakistan’s industrial sector but its production is steadily declining as farmers are switching to other crops.
He said that the reason for this is that the cotton farmers were not getting an adequate price, which forced them to choose alternative crops.
It is said that due to severe weather conditions, water scarcity, attacks of insects, especially whitefly and pink Sunde, the per-acre production of cotton in Pakistan is having a negative impact, resulting in the country’s yield per acre not increasing significantly over the years.
In the year 2014-15, 1 crore 42 lakh bales of cotton produced in the country have reduced to barely 85 lakh bales today.
As farmers have no alternative source of income, the solutions to their problems should be wisely sought to make farming profitable. At this time, there is a need is to increase the yield of cotton per acre. Our average yield per acre ranges from 700 kg per acre to 750 kg per acre.
It could be doubled with the use of modern technology. The country loses 1.5 to 2million bales of cotton annually due to the attack of pink bollworm alone.
According to an estimate, an increase of one million bales of cotton results in a 0.5% increase in GDP, and the value of one million bales of cotton is about one billion dollars.
The nations that prioritise research alongside other welfare programs tend to develop more rapidly. The government should prioritise addressing financial and administrative challenges faced by cotton research institutes and their scientists by implementing an immediate action plan.
Copyright Business Recorder, 2024