KARACHI: Cotton prices are stagnant, and business is extremely slow. However, there will be an improvement in business after Eid. Due to the unprecedented increase in taxes, All Pakistan Textile Mills Association (APTMA) and Pakistan Cotton Ginners Association (PCGA) have rejected the budget. The textile sector and spinning industry have warned of devastation. An announcement has been made regarding the reduction in electricity and petroleum prices.
President Pakistan Kissan Ittehad Khalid Mahmood Khokhar expressed disappointment over the budget, and said that it is feared that there are fears of a 20% decline in cotton cultivation.
In the meeting of the FPCCI standing Committee on Raw Cotton recommendations for improvement in the cotton business were presented. The partnership between Pakistan Central Cotton Committee and All Pakistan Textile Mills Association and the private sector can be a game-changer for the cotton industry.
Vice President PCCC Dr Yousaf Zafar welcomed the announcement of government of giving incentives for PCCC.
In the local cotton market, during the past week, due to Eid-ul-Azha and the closure of mills and spinning factories led to a relatively low business volume, as the arrival of phutti was less compared to the selling quantity. The other reason behind low trading volume is partial starting of ginning factories.
Future deals for post-Eid-ul-Azha delivery have already been finalized, which has stabilized cotton prices.
In Sindh province, cotton prices are in between Rs 20,000 to Rs 20,400 per maund while in Punjab province, cotton prices are in between Rs 21,000 to Rs 21,500 per maund. However, due to transportation issues, business has slowed down, and new deals are not being made; instead, previous deals are being fulfilled.
There is a demand for post-Eid delivery cotton, but spinners are hesitant to make advance deals due to uncertainty about the supply of phutti. New spinners starting production will show interest in making deals for post-Eid delivery. However, there will be an increase in business volume after Eid, but spinners will be cautious in July due to forecast of rains.
Currently, only a few desperate mills are showing interest in buying, as the mills position are not strong either. There is no need for cotton yarn and textile products at the moment. The business depends on the measures taken in the budget.
Prime Minister Shehbaz Sharif has announced a electricity package to boost the national industry, reducing the electricity price for industries by Rs 10.69 per unit.
The electricity price for industry and export sectors has been set at Rs 34.99 per unit. In Sindh province, the price of cotton is in between Rs 20,000 to Rs 20,400 per maund, while the phutti price ranges from Rs 9,000 to Rs 10,200 per 40 kg. In Punjab province, the cotton price is in between Rs 21,000 to Rs 21,500 per maund, while the phutti price ranges from Rs 11,000 to Rs 12,000 per 40 kg. The supply of phutti is very limited.
The Karachi Cotton Association’s Spot Rate Committee closed the spot rate at Rs 19,700 per maund.
According to Naseem Usman, Chairman of the Karachi Cotton Brokers Forum, the rate of Future Trading in international cotton market are low after fluctuating widely. The rate of Future Trading of New York cotton is in between 70 to 73.50 US cents per pound.
According to the USDA’s weekly export and sales report, for the year 2023-24, more than one lac and seventy seven bales of cotton were sold.
China ranked first by purchasing 77,500 bales, followed by Vietnam with 28,900 bales, and Pakistan with 16,900 bales. For the year 2024-25, more than one lac and seventy seven thousand and four hundred and fourty bales were sold.
Vietnam topped the list by purchasing 73,500 bales, followed by China with 67,300 bales, and Mexico with 11,400 bales.
Moreover, the All Pakistan Textile Mills Association has expressed its deep concern over the proposed budget for the fiscal year 2024-25, terming it a retrogressive budget. APTMA has stated that the proposed budget threatens the very survival of the textile industry, which will lead to unemployment, political instability, and economic instability, ultimately having adverse effects on the country’s politics, security, and economy.
In the fiscal year 2022, Pakistan’s exports amounted to $19.3 billion, which decreased to $16.5 billion in 2023. Meanwhile, the decline continued in 2024, with a shortfall of 60 crore dollars.
In this situation, urgent government intervention is needed to support the textile industry, which is facing an energy crisis. No measures have been taken to address this crisis. Moreover, the tax rate on exports has been increased from 1% to 29%, and a 2% advance tax is also being levied. The 18% sales tax, including turnover tax, is further detrimental to local manufacturers who are already struggling with high electricity costs. As a result, yarn imports have increased by 600%, disrupting trade balance and delaying payments, which is increasing the risk of bankruptcy. The delayed payment of sales tax and other funds is exacerbating the crisis for industries.
Meanwhile, the Pakistan Cotton Ginners Association (PCGA) has rejected the federal budget for the fiscal year 2024-25, terming it ‘oppressive’ and alleging that the cotton ginning industry is being deliberately destroyed through a conspiracy.
Addressing a press conference, PCGA Chairman Chaudhry Wajid Arshad said that government actions will promote illegal and undocumented trade. The budget measures will boost the undocumented economy. The cotton ginning industry is currently paying 11 different types of heavy taxes. Vice Chairman Rana Waseem Hanif, former Chairman Haji Muhammad Akram, Amanullah Qureshi, Sohail Mahmoud Harl, Mazhar Shoaib Natakani, and Khawaja Muhammad Arshad were also present on the occasion.
Vice Chairman Rana Waseem Hanif and former Chairman Sohail Mahmoud Harl said that the excessive taxes and heavy duties have destroyed the free business environment. Increasing cotton cultivation is essential for agricultural, industrial, and economic progress.
The PCGA has demanded that the ginning industry be provided with cheap electricity like the textile sector. The import duty on cotton has been welcomed. This will provide financial and economic protection to Pakistani farmers. The PCGA still demands that the ‘Grow Cotton, Save Economy’ campaign can bring economic prosperity.
The government and authorities must take immediate notice of the current situation and ensure the financial and economic protection of farmers, who play a vital role in the country’s economy.
The President of Pakistan Kisan Ittehad (PKI), Khalid Mahmoud Khokhar, expressed disappointment that no mention was made of agricultural research. He pointed out that while international commodity prices have fallen, domestic costs have increased, making farming unbearable. He cited a 20% decrease in cotton cultivation as evidence and noted that farmers are still worried despite a bumper wheat crop.
The Vice President of the Pakistan Central Cotton Committee (PCCC), Dr. Yusuf Zafar, has expressed his heartfelt gratitude to the federal government for recognizing and supporting the PCCC in the recent budget. The allocation of a loan of Rs 656 million for salaries and pensions is a significant milestone for the cotton sector.
Dr. Zafar praised the government’s move, saying that this loan will enable the PCCC to promote innovation and sustainability in the cotton sector, ultimately benefiting all stakeholders, from farmers to industrialists. The loan is conditional on the payment of cotton cess, which amounts to a total of Rs 4 billion, payable by the textile industry. The government’s strategic intervention is expected to revive the cotton industry.
Dr Zafar reaffirmed his commitment to work with all relevant stakeholders of the PCCC to ensure that the maximum benefit is derived from this government support to secure a prosperous and sustainable future for Pakistan’s cotton sector.
The partnership between Pakistan’s cotton research body, the Pakistan Central Cotton Committee (PCCC), and the All Pakistan Textile Mills Association (APTMA), a group of textile magnates, can be a game-changer in reviving the national cotton value chain from fiber to fabric and taking the industry to new heights. This was stated by Dr. Yusuf Zafar, Vice President of PCCC, during a telephonic conversation with Kanwar Usman, Head of the Textile Section of the International Cotton Advisory Committee (ICAC), based in Washington, DC.
According to a statement issued by Sajid Mahmoud, the Head of transfer of technology from the Central Cotton Research Institute (CCRI) Multan, which is one of the many research facilities operating under the PCCC umbrella, will play a key role in this regard.
Kanwar Usman, who has spent 20 years working in various textile value chain sectors, including 14 years as Director R&D and Director General at the Ministry of Commerce’s Textile Division, praised Dr. Yusuf Zafar on his new responsibilities as Vice President of PCCC and assured technical assistance from ICAC to help Pakistan align its cotton value chain with modern trends. Both visionaries discussed the possibilities of PCCC’s partnership with the private sector in detail and how it can lead to a new mechanism for innovation-driven growth.
Dr Yusuf Zafar informed the ICAC Textile Head about the measures being taken to promote cotton research, which aims to increase production per acre and meet all quality aspects. He thanked Kanwar Usman for his cooperation in enhancing Pakistan’s cotton value chain.
Dr Yusuf Zafar said that aligning private sector resources and expertise, especially APTMA and PCCC, will have far-reaching impacts on the cotton value chain. He said that the actions being taken and future strategies aim to address key challenges in the cotton sector and convert opportunities into national benefits.
PCCC and APTMA can create a strong economy by balancing PCCC’s technical and non-technical human resources, strengthening research facilities, enforcing financial discipline, and promoting better cotton and national breeding programs. This partnership will also ensure better income for farmers due to better production quality and quantity, and provide the textile industry with access to high-quality raw materials. Long-term partnership will drive research and development, promote innovation and entrepreneurship, and translate into increased exports, GDP growth, and a stronger national economy.
Copyright Business Recorder, 2024