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KARACHI: The local cotton market on Wednesday remained stable and trading volume was satisfactory. Cotton Analyst Naseem Usman told Business Recorder the rate of cotton in Sindh is in between Rs 12900 Rs 13100 per maund. The rate of cotton in Punjab is in between Rs 13500 to Rs 13600 per maund.

The rate of the new crop of Phutti in Sindh was in between Rs 4800 to Rs 5300 per 40 percent. The rate of Phutti in Punjab is in between Rs 4800 to Rs 6200 per 40percent. The rate of Banola in Sindh is in between Rs 1600 to Rs 1800 per maund. The rate of Banola in Punjab is in between Rs 1700 to Rs 1900 per maund. The rate of cotton in Balochistan is Rs 13000-13100 per maund. The rate of Phutti in Balochistan is in between Rs 5000 to RS 5300 per maund.

1800 bales of Shahdad Pur, 2800 bales of Tando Adam , 2200 bales of Sanghar, 400 bales of Khadro were sold in between Rs 12900 to Rs 13100 per maund, 400 bales of Noabad were sold at Rs 13000 to Rs 13100 per maund, 800 bales of Chichawatni were sold at Rs 13500 to Rs 13600 per maund, 200 bales of Haroonabad were sold at Rs 13500 per maund and 100 bales of Samundri were sold at Rs 13600 per maund.

The Federal Cabinet has referred back a decision of the Economic Coordination Committee (ECC) on fixation of cotton intervention price of Rs5,000 per 40percent on the request of Prime Minister's Advisor on Commerce and Investment Abdul Razak Dawood.

Well informed sources told Business Recorder that Dawood was on a foreign visit on July 16, 2021 when the ECC headed by Finance Minister took a decision on a summary of the Ministry of National Food Security and Research.

On July, 16, 2021, Ministry of National Food Security and Research submitted the following proposals: (i) procure lint cotton at pre-determined rate, (base grade 3 with staple length 1-1-/32") based on Rs 5,000 per 40percent of seed cotton; (ii) constitute a Cotton Price Review Committee (CPRC) with mandate to review market price and propose intervention at fortnightly basis; (iii) 0.2 million cotton bales may be procured by TCP, initially involving Pakistan Cotton Standard Institute (PCSI) for quality and standards checks, CPRC will direct TCP for additional procurement if needed; and (iv) provide a Cash Credit Limit (CCL) as required by the TCP to procure initially for one million bales of cotton at intervention price, and additional incidental charges of about Rs7.71 percent as financial and administrative cost etc. of TCP.

After detailed discussion, sans the representative of Commerce Ministry who left the meeting early to reportedly gossip with friends, the ECC decided that the CPRC shall be entitled to trigger procurement of lint cotton whenever the price falls below Rs5000 per 40percent in local market, provided that the intervention price is fixed at 90 percent of the Import Parity Price (IPP) of Cotlook-A Index, but in no case, higher than Rs5000 per 40percent for a fortnight; provided further that CPRC shall invariably meet three days before the end of such period to review market situation and decide upon continuation of the intervention or otherwise.

The sources said that the ECC, which is scheduled to meet with Finance Minister Shaukat Tarin on Wednesday (today), will reconsider its decision of July 16, 2021.

Ministry of National Food Security and Research, in its summary stated that cotton, being the life-line of Pakistan's economy, achieved the highest production of 14.1 million bales in 2004-05. Since then, the cotton production hovered around 12 million bales, but for the last 4 years, it has declined to as low as 9.18 million bales in 2019-20 and 6.98 million bales in 2020-21, mainly due to area decline in Punjab and a thin profit margin in cotton than its competing crops like sugarcane, maize and rice.

Pakistan can potentially produce 20 million bales in 3-5 years, if farmers are supported with appropriate technology and ensured a fair price. Lower cotton production is hampering the industry's growth, textile exports and elevating imports bill of edible oil, raw cotton, livestock meal and causing economic insecurity in rural areas, etc.

In the past, Pakistan has procured cotton through Trading Corporation of Pakistan (TCP) five times during 1998-2010. While comparing intervention period with that of non-intervention period, it reveals that cotton area and yield has increased during TCP intervention period and decreased during the period without intervention (2011-2020).

Earlier, Ministry of NFS&R has moved similar summaries twice in 2020, however, ECC did not agree with the proposals of the Ministry. Resultantly, Cabinet constituted a committee consisting Ministers of Foreign Affairs, NFS&R and EAD and Advisor, Climate Change Division to deliberate and re-submit a summary to ECC. Subsequent, ECC on the summary of the MNFS&R directed on May 21, 2020 to "Minister NFS&R to hold a structural discussion with provinces to evaluate various options of promoting cotton cultivation and extending support to cotton growers".

As a result of consultation, Punjab Agriculture Committee headed by the Governor (Punjab) recommended an incentive package of Rs. 5,000 as support price and a grant subsidy of Rs. 15,000 per acre, for cotton grower to enhance cotton production. In June 2021, M/o NFS&R again moved a summary to ECC of the Cabinet.

The ECC decided to constitute a committee under the chairmanship of Minister NFS&R. The Committee met on July 07, 2021and reached to the following conclusion ;(i) Cotton Price Review Committee will monitor local market prices. If market prices fall below Rs. 5000/40percent intervention will be initiated @ 90percent of the import parity price of Cotlook- A Index (the reference international price) ;(ii) there would be an initial intervention for 200,000 bales, further buying would be decided by the CPRC based on market trends and ;(iii) the procurement operation will be terminated by December 31, 2021. Ministry of National Food Security and Research stated that the intervention at this point of time is essential and will ensure investment on crop management, which can enhance production by 10percent or one million bales. Agriculture Policy Institute (API) has calculated the cost of production and recommended the intervention price as Rs. 4,500-5,000/40percent of seed cotton for the year 2021-22.

Cotton Cooperation of India has increased the prices by Rs 100 to Rs 200 per candy. Stakeholders of the knitwear garments segment have requested the government to allow them representation in meetings related to textile exports.

In a statement, Pakistan Hosiery Manufacturers and Exporters Association (PHMA) Chief Coordinator Muhammad Jawed Bilwani highlighted that knitwear garment exports of Pakistan had surged 36.57percent in fiscal year 2020-21.

Total exports of the country rose from $21.4 billion in FY20 to $25.3 billion in the previous fiscal year and the share of textile in the overall exports came in at 60.86percent.

"Hosiery products have kept a major share of 15percent in the textile group and this segment has the potential to contribute 25percent to the total textile exports of the country," he said.

Bilwani added that the share of knitwear garments in total exports would rise to 20percent in fiscal year 2021-22.

Had the government keenly considered proposals of the knitwear sector and addressed all problems and issues of businessmen, the contribution of knitwear garments to the total exports would have been much higher in fiscal year 2020-21, he remarked.

The export value of hosiery products rose from $2.8 billion in FY20 to $3.8 billion in FY21. "Knitwear exports recorded an increase of 36.6percent despite the adverse impact of the Covid-19 pandemic," he said. "The segment also emerged as the highest foreign exchange earner, of $3.81 billion, in the previous fiscal year."

He elaborated that the foreign exchange earned by the sector was 25.83percent higher than the export revenue earned from exports of readymade or woven garments and 37.68percent more than the receipts for bedwear exports.

If the export of knitted bedsheets and fabric was included, the total foreign exchange earned by the knitwear sector would soar to $4.5 billion, accounting for 29.2percent of the entire textile group and 17.91percent of the total exports, he said.

He appreciated the exporters of hosiery sector for achieving the milestone despite the challenges posed by the pandemic.

He asked Prime Minister Imran Khan to focus on the knitwear sector as it had the potential to enhance exports manifold. Bilwani pointed out that major exports of Bangladesh included knitwear products as well and they covered 43.66percent of total exports of that country.

He mentioned that the annual global demand for knitwear stood at $208 billion but Pakistan's share in the global knitwear exports stood at a meagre 1.83percent.

He was of the view that Pakistan had the resources to enhance hosiery exports within a short time frame.

He, however, regretted that the government had failed to hold consultations with stakeholders of the knitwear sector on boosting exports while officials belonging to the rest of the textile chain were invited for meetings.

The Spot Rate remained unchanged at Rs 12900 per maund. The rate of Polyester Fiber increased by Rs 3 per percent and was available at Rs 216 per percent.

Copyright Business Recorder, 2021

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