KARACHI: The price of cotton remained stable during the last week, amid a low business volume. However, the continuous increase in energy and gas prices, has added to the woes of the textile sector. Textiles and spinners are being economically harmed by this double-edged sword.
The cost of cotton stock is increasing, and the stock of cotton yarn is also on the rise. Additionally, there is an unbearable delay in the payment for sold cotton yarn.
The market is experiencing a significant financial crisis. Consultations between Pakistan Cotton Ginners Association and Central Cotton Research Institute Multan are underway regarding the potential increase in cotton cultivation of cotton for the next season. If the intervention price of Phutti is not guaranteed, it is likely to impact the sowing of cotton.
In the local cotton market, interest in buying cotton from textile and spinners during the past week saw a significant increase in cotton prices, although the business volume is very limited due to high prices. Stock is diminishing day by day due to higher prices; most of the big textile groups are buying.
The rate of Future Trading of New York cotton is stable after fluctuating, which is also positively affecting the price. On the other hand, the government continues to raise energy prices. The prices of electricity, gas, petroleum products, etc, are continuously increasing, leading to a rise in costs.
For the past several months, All Pakistan Textile Mills Association, all chambers of commerce, and all international zone industrial and business organizations have been appealing to the government that industries cannot be run in such a situation.
The interest rate is also unsustainable, and billions of rupees are stuck in refunds, while the price and demand for cotton yarn and textile products are very low. Payments continue to be delayed. Textile spinners say we are being economically crippled by a double-edged sword. On one hand, there is a surplus stock of cotton, while on the other, there is a surplus stock of cotton yarn and textile products. Interest on these stocks is continuously increasing, and payments for sold yarn and products are also being delayed.
According to the report, considerable sowing is taking place in the low-lying areas of Sindh and many areas of the Punjab province this year. Cotton growers are demanding that the government announce the support price of cotton for the upcoming season and develop a mechanism for the procurement of cotton through the Trading Corporation of Pakistan from the beginning of the season. Last year, the government had fixed the intervention price of Phutti at Rs 8,500 per 40 kg.
Farmers had sown cotton in abundance upon the government’s announcement, but the government cheated them by not buying a single bale of cotton through TCP at the intervention price. A positive strategy should be adopted.
Farmers are already concerned that the government is attempting to increase cultivation on one hand while simultaneously raising fertilizer, DAP, and energy costs on the other, which will adversely affect cotton and other production. Before the cost of production rises, those already struggling with inflation will face even more difficulties.
The rate of cotton in Punjab and Sindh is in between Rs 20,000 to Rs 23,000 per maund after increasing. The rate of Phutti in Punjab is in between Rs 8,500 to Rs 10,500 per 40 kg. The rate of Khal, Banola and oil is stable.
The Spot Rate Committee of the Karachi Cotton Association stabled the rate at Rs 22,000 per maund.
The Chairman of the Karachi Cotton Brokers Forum, Naseem Usman, stated that the international cotton market is experiencing volatility. After fluctuations in the price of New York cotton, it remained stable.
According to the weekly income and sales report of the USDA, sales of 130,500 bales were made for the year 2023-24. Bangladesh remained at the top by purchasing 50,600 bales, followed by Turkey with 34,300 bales, and Vietnam with 19,700 bales.
For the year 2024, sales of 58,100 bales were recorded. Indonesia topped the list by purchasing 22,000 bales, followed by Turkey with 15,400 bales, and Mexico with 11,600 bales.
The crisis in the textile industry has intensified due to a 26% increase in electricity tariffs in three months and an 18% increase in tariffs in six months. The Central Power Purchasing Agency has further exacerbated industry dismay by proposing a fuel adjustment tariff increase of 7.13 rupees.
According to the Pakistan Textile Exporters Association, due to the energy crisis, 50 spinning mills, 10 processing mills, and hundreds of weaving units have already been closed. Partially operational textile mills have also begun shutting down under the current circumstances. It is evident that textile exporters are facing severe revenue shortages due to delays in refunds held for years, while production costs have more than doubled due to a decrease in the value of the rupee and high interest rates charged by banks.
In these circumstances, Pakistan has fallen behind in the race with other countries in the region, and there is a noticeable decrease in obtaining orders from foreign countries for the industry. Moreover, due to the lack of reforms in the energy sector, the industry is also becoming increasingly disheartened. Industrialists say that in order to stabilise the economy, especially the textile sector, it is extremely important to continue providing electricity and gas at competitive rates to the export industry in the country.
Alongside this, structural reforms are also essential to smooth the path for new investments in the country and promote industrialization, so that the journey of economic development can be continued by reducing production costs.
According to Sajid Mahmood, Head of the Technology Transfer Department at the Central Cotton Research Institute Multan, said in his statement that at present, cotton cultivation is expected to reach 8 to 10 lakh acres in Punjab, while in Sindh, cotton cultivation is expected to reach 15 lac acres.
In Punjab, yields of 30 to 35 maunds per acre are expected, while in Sindh, yields of 35 to 45 maunds per acre are anticipated. To maximize cotton production, all stakeholders should immediately announce a support price of Rs 8500 per maund through a unified platform and ensure its implementation. The initiative for the preservation and revival of cotton should begin from this point, and a robust media campaign should be launched to ensure the support price is established. To solidify the support price, immediate programmes should be organized by various stakeholders including the chambers of commerce, FPCCI, farmers, and other federal and provincial level organizations, each playing their role through their respective organizational platforms.
The media team of Pakistan Cotton Ginners Association (PCGA) visited the Central Cotton Research Institute, Multan, as part of the promotion of cotton cultivation in Pakistan. They recorded a programme discussing various aspects of cotton cultivation with heads of departments, wherein agricultural experts from the CCI presented their views on the maintenance of cotton cultivation. Dr. Muhammad Naveed Azam, Director of CCI Multan, discussed land preparation, seed preparation, and sowing for cotton growers before initiating cultivation. Similarly, Sajid Mahmood, Head of Technology Transfer Department, Dr Rabia Saeed, Head of Entomology Department, Muhammad Ilyas Sarwar, Head of Fiber Technology Department, Dr Ahmed Waqas, Head of Plant Physiology and Chemistry Department, sequentially shed light on the importance of analysis of land before cotton cultivation, suggestions for protection against possible attacks of pests on cotton crops, good management practices, quality and cleanliness of cotton, and the importance of land analysis before cotton cultivation. Despite limited resources, the Central Cotton Research Institute, Multan, is playing a significant role in the development and promotion of cotton, and this programme is part of its ongoing efforts.
Copyright Business Recorder, 2024