Phutti prices posted a decline of Rs 700 per maund during the current crop season due to imposition of General Sales Tax (GST) on oil cake. Presently, phutti is being traded at Rs 2,400 to Rs 2,600 per maund in the domestic market compared to Rs 3,200 to Rs 3,300 per maund in June this year, when the new crop season got under way.
"The federal government has imposed some 5 percent GST on the sale of oil cake in the Budget 2015, of which its sales are on decline from the beginning of the season," said Ihsan ul Haq a member of Pakistan Cotton Ginners Association (PCGA). Oil mills are reluctant to buy oil cake on higher rate and demanding removal of GST. Finance Minister Ishaq Dar also promised to withdraw this tax, however still no notification has been issued by the ministry of finance/Federal Board of Revenue, he added.
Although, phutti prices are on decline, the prices of raw cotton posted a surge of Rs 200 per maund in the domestic market during last few days. Cotton is selling at Rs 5,500 to Rs 5,600 per maund in Punjab and Rs 5,400 to Rs 5,500 per maund in Sindh, Haq said. The rate has been increased due to slow arrival of phutti and higher demand of cotton yarn in the domestic and international markets, he maintained.
Talking about the ginning factories, he said presently, some 150 ginning factories have been operational across the country and the remaining are in process of starting operation in next few days. According to Karachi Cotton Association report, some 15,800 cotton bales were traded on Wednesday and this was the highest-ever trading in a single day in last five months, Haq said.
He urged the government to withdraw GST in the larger interest of the industry as its imposition has slowed the sales of oil cake, besides hurting the price of phutti. In this situation farmers/growers may face losses in the face of lower price and the crop cultivation may fall next year, he added.