KARACHI: Mixed trend was witnessed in the rate of cotton. The rate of cotton in Punjab; dropped by Rs 400 per maund. The rate of cotton increased in the international cotton markets.
The efforts of Pakistan Cotton Ginners Association to abolish taxes are commendable, but it is a pity that government is continuously ignoring the cotton. Due to low cotton production, the textile mills started importing cotton from abroad. There are rumours that some ginners are mixing waste in cotton. Pakistan Cotton Ginners Association and All Pakistan Textile Mills Association should immediately take notice on this issue.
Mixed trend was seen in the rate of cotton during the last week after the fluctuation in the rate due to the interest of textile and spinning mills in buying. The rate of cotton in Sindh; remained stable. The rate of cotton in Punjab witnessed a significant decline of Rs 400 per maund. With the increase in the arrival of new Phutti ginning factories has started their operations. According to the estimates one lac new bales of cotton will be prepared till June which is more as compared to last year.
The arrival of Phutti from Lower Sindh is significantly increasing. 15 ginning factories of Sindh and 10 ginning factories of Punjab are partially running on the cotton coming from lower areas of Sindh. The arrival of Phutti has started partially from some areas of Punjab, and is continuously increasing day by day.
Different views are coming regarding production of cotton in the country. Majority of them are of the view that if the weather conditions remains favorable then it is expected that 75 lac to 80 lac bales will be produced in the country. Although, people relating to textile sector are saying that this year new textile machinery is being imported. Import agreements of for the import of more than 20 lac spindles have been signed due to which the demand of cotton will increase.
The country is facing an alarming decline in the cotton producing for the last few years due to which cotton will have to be imported from abroad in very large number. This year in the beginning of the season the rate of cotton is approximately more than Rs 1500 to Rs 2000 per maund as compared to international market. Keeping in mind the high rates of local cotton big textile groups are singing agreements for the import of cotton from abroad.
Up till now agreements for the import of more than three lac bales from abroad were signed. If the production capacity of local textile mills will be increased then we will have to import more cotton from abroad by spending foreign exchange of worth billions of dollars.
The government is continuously ignoring cotton crop while giving incentives on other crops. This year in the budget no positive step is witnessed for increasing the production of cotton but cotton was not cultivated on the land fix for cotton cultivation.
In Punjab government had announced to cultivate cotton on 40 lac acres but sowing was completed on 34 lac acres. In the same way government had announced to cultivate cotton on 17 lac acres, but sowing was completed on 14 lac acres to 15 lac acres.
On the other hand instead of giving incentives to the cotton farmers government had increased the ratio of sales tax on cotton from 10% to 17% while they had imposed 17% sales tax on Phutti.
President Pakistan Cotton Ginners Association Dr Jasu Mal Limani is continuously holding meetings with the ministers. On Friday Finance Minister Shaukat Tarin changed the ratio of some taxes imposed in budget but up till now nothing decided regarding taxes on cotton and Phutti. All the stake holders related to cotton business especially there is uncertainty among Pakistan Cotton Ginners Association. They are saying that government had ignored ginners so badly that they are now involved in mixing waste in cotton.
According to PCGA sources if the government had not accepted their demands they have no option except to stop the operations of their factories.
The rate of cotton in Sindh during the week after fluctuation was in between Rs 12,900 to Rs 13,200 per maund. The rate of Phutti is in between Rs 5,700 to Rs 5,900 per 40 kg. The rate of Banola is in between Rs 1,800 to Rs 2,000 per maund.
The rate of cotton in Punjab is in between Rs 13,600 to Rs 13,700 per maund. The rate of Phutti is in between Rs 5,600 to Rs 6,200 per 40 kg while the rate of Banola is in between Rs 2,000 to Rs 2,100 per maund.
The Spot Rate Committee of the Karachi Cotton Association has stabled the rate of cotton at Rs 12,600 per maund.
Chairman Karachi Cotton Brokers Forum Naseem Usman told that over all bullish trends was witnessed in international cotton market. The Rate of Promise (Waday Ka Bhao) of New York Cotton was remained in between 86 American cents to 87 American cents. While according to USDA weekly export report the exports witnessed a decline of 33% as compared to last week. This week Pakistan was the biggest importer of American cotton during 2020-21 and 2021-2022. The start of import in the beginning of the season is a question mark on the quality and production of cotton in the country. The rate of New York Cotton remained stable due to the negative USDA weekly export and sale report and due to the rise in dollar index.
The sales of American cotton witnessed a decline of 33% in 2020-21 with more than 74,000 bales. The sales of American cotton witnessed an increase of 44% during 2021-22 with more than one lac bales.
During the last week American export also witnessed a decline of 32% with more than two lac bales. In the current report Pakistan was the biggest importer with more than one lac and thirty thousand bales.
According to the experts this is question mark on the production of cotton in Pakistan as in the beginning of the season mills are importing cotton in such a large volume. The arrival of new season of cotton has started in Brazil. The rates are stable there. Big cotton broker of Ahmedabad India and secretary Gujarat Traders Association Ajay Dalal that rate of cotton in India is increasing as Indian textile mills are taking interest in buying.
Chairman Pakistan Cotton Ginners Association Dr Jasu Mal Limani called on Chairman Pakistan People Party Bilawal Bhutto Zardari and briefed him about the problems faced by cotton ginners who includes proposal of imposition of 17% sales tax on Cotton Seed Oil and enhancing the tax ratio on cotton from 10% to 17%.
Meanwhile, Prime Minister Imran Khan was given a briefing on textile sector in context of its improvement as a result of the steps taken by the government. The meeting was attended by PM's Adviser on Trade and Investment Abdul Razzak Dawood, Special Assistant on Political Affairs Malik Amir Dogar, and the Members of National Assembly Asim Nazir, Raza Nasrullah Ghuman, Khurram Shehzad and industrialist Shahid Nazir.
MNA Asim Nazir briefed the Prime Minister on issues related to the textile sector and its role in exports. He also presented to the prime minister suggestions for further improvement and development of textile sector.
The meeting also discussed political situation in the country, relief to the people in the budget and measures to facilitate and develop industries.
Due to the steady increase in cotton imports in Pakistan, international cotton exporters are currently meeting with local textile mill owners to expand exports. Currently, repetitive of International Cotton Council along with shippers are meeting with local mills owners.
Copyright Business Recorder, 2021