Ministry of Textile Industry has estimated a loss of Rs 22 billion to cotton growers during 2015-16, after ginners and downstream industry denied them due price, it is learnt. Official sources revealed to Business Recorder that due to lack of quality-based pricing system and non-practising of the cotton standardisation system Pakistani raw cotton is being traded at an average discount of 7 cents per pound in the international market.
However, analysis of the price differential vis-à-vis international market (Cotlook index A) and Karachi Cotton Association (KCA) showed it was over 18 cents per pound for 9.034 million bales during 2015-16- hence the loss was around Rs 22.067 billion to the growers.
According to the documents, KCA's spot price of raw cotton was Rs 4880/40 kg in August 2015, however at "A" Index price was Rs 6540/40 kg. In September 2015, KCA's spot price was Rs 4991/40 kg and it was Rs 6267 at "A" Index. In October 2015, KCA's spot price was Rs 5582/40 kg and Rs 6267/40 kg at "A" Index. In November 2015, KCA's spot price was Rs 5698/40 kg against Rs 6358/40 kg at "A" Index. In December 2015 KCA's spot price was Rs 5607/40 kg against Rs 6450 at "A" Index. KCA's spot prices of raw cotton remained at an average of Rs 5352/40 kg in 2015 against Rs 6358/40 kg at "A" Index.
Pakistan is the 4th largest cotton producing country and is considered one of the most contaminated crops in the world. Exporters Guide by International Trade Centre categorises Pakistani cotton in Group III where 90-100 bales are contaminated with 20-100g of contaminants per ton. Pakistani cotton is hand picked with good colour, but due to dry and hot weather conditions in cotton region it is still traded at lower prices and considered as most contaminated cotton. APTMA estimated over $1.4 billion loss due to cotton quality whereas National Textile University in a study estimated over $4 billion loss because of cotton contamination.
On the top of that APTMA is the single buyer and acts as a cartel according to the ministry officials, which accounts for growers unable to get their due price. APTMA Spokesperson Mohammad Anis confirmed to Business Recorder that raw cotton prices remained 20 percent low in Pakistan as compared to the international market, however, the main reason was excess of contamination and low yield.
He further said that due to pirated seed germination remains low which hit the overall production. The APTMA representative accused Pakistan Central Cotton Committee, which comes under the Ministry of Textile Industry for a decline in cotton production, failure to introduce and develop certified seed, control Pink bollworm and reduction in acreage under cotton cultivation.