KARACHI: Stability after fluctuations was seen in local and international cotton markets. There was decline in demand for cotton yarn. Financial crunch in the market prevailed side by side a continuous increase in production cost. Interest of Pakistani exporters was seen in Heimtextil.
Pakistan Yarn Merchants Association seeks to address budget deficiencies. A new summary of fixing the support price of Phutti at Rs 7000 was presented in Economic Coordination Committee. There was uncertainty among ginners as government is continuously neglecting matters relating to sales tax.
The local cotton market remained generally stable after fluctuations in cotton prices. The price of cotton remained relatively stable during the first three days of the week due to limited supply of cotton compared to the purchase of cotton by textile mills. Later, after the Finance Minister announced increase in the prices of petroleum products, the textile mills took a cautious stance while the ginners started making offers at lower prices due to fear of further reduction in the price of cotton.
The price of cotton decreased by Rs 300 to Rs 500 per maund. However the price of Phutti also decreased. Later on Friday evening, the flow started rising again as the ginners were oversold due to which they were completing the earlier deals. The supply of Phutti is increasing in Sindh province while the supply of Phutti is partially increasing in Punjab. The textile sector says that in the days to come, the government will increase the prices of petrol, electricity and gas, adding that rising dollar will increase uncertainty and increase production costs. Textile mills are buying cotton very cautiously as the cotton yarn parity is almost out of proportion. On the other hand, it will be very expensive to keep more stock of cotton due to increase in interest rates.
The dollar’s appreciation has made it even harder to import cotton from abroad. There is severe financial crisis in the market. Payments of goods are being delayed and there is a lot of uncertainty in the market.
According to the textile sector circles, there is a lack of new orders from foreign countries. Many buyers are also being accused of deviating from the agreements. In addition to shipment issues, many buyers are delaying delivery due to which demerge is also taking place. There are rumours that many mills have reduced production and retrenched workers.
Sometime ago, cotton looms were working in full capacity; however, now, they are closing their operations because there is no businesses. When somebody talks to industrialists and traders regarding businesses they said don’t talk about business but talk about something else. They are very much worried because of the economic uncertainty. Many industrialists are worried that they’ve imported billions of dollars worth of new machinery and what will be its future.
The textile sector is complaining that government has completely ignored them. Government has not announced any incentives for them in the federal budget but it has made it more difficult to run the industry by raising energy prices. The ginners are also complaining that their sector has also been neglected in the budget.
International cotton markets; however, continued to fluctuate.
About 5000 bales are being produced daily in Sindh province. Their price is in between Rs 20500 to 21000 per maund. Some 4 to 5 ginning factories have started running partially. The rate of Phutti is in between Rs 9000 to Rs 9500 per 40 kg. The rate of Khal and Banola remained stable. The partial arrival of Phutti from Balochistan has started.
The spot rate committee of Karachi Cotton Association has reduced the spot rate of cotton for the new season 2022-23 by Rs 200 per maund and closed it at Rs 20,600 per maund. Before that spot rate was announced on July 1 but this year it is announced 15 days earlier due to increase in supply of cotton.
Naseem Usman, Chairman, Karachi Cotton Brokers Forum, said that the price of cotton is fluctuating in the international cotton markets. The Rate of Future Trading of New York Cotton after decreasing from 146.50 cents closed at 143 cents. According to the USDA’s weekly export and sales report 26,500 bales of 2021-22 were sold which is 90 percent less as compared to previous week. China topped the list with 7,300 bales. Pakistan came second with 4,900 bales. Vietnam came in third with 4,600 bales.
Some 3 lakh 80 thousand 200 bales for the year 2022-23 were sold. China topped the list with more than three lakh sixty thousand bales, followed by Vietnam with 11,400 bales.
The Economic Coordination Committee (ECC) of the Cabinet will fix the minimum support price for cotton at Rs7,000 in the next meeting, said Federal Minister for National Food Security and Research Tariq Bashir Cheema.
After the 18th constitutional amendment, agriculture is a provincial subject and the federal government has no interference in the sector, said the minister while briefing the Senate Standing Committee on National Food Security and Research which met with Syed Muzafar Hussain Shah in the chair here on Wednesday.
The committee was given a briefing regarding cotton production and support prices. The ministry officials informed the committee that at present, the price of cotton in the open market is around Rs12,000 per maund. The committee observed that there is an institutional system in the country regarding fixing the support price of cotton.
The committee recommended that the Ministry of National Food should determine the correct procedure for fixing the support price of cotton, estimate the cost of production per acre and fix the price in consultation with all stakeholders.
The Committee also recommended for formation of a Cotton Board in the Ministry of National Food including provincial food departments, cotton and seed officials and other joint ventures.
Briefing the committee, the federal minister said that the Rs7,000 support price of cotton will be approved in the next ECC. He further said that funding from international organizations and institutions is being spent by the federal government on provinces.
After the 18th Amendment, it was realized that food security was a federal matter. Ministry of National Food Security was formed after the 18th amendment keeping in view the food security issues, said Cheema, adding that the ministry was formed four months after the 18th Amendment. We have food security, not agriculture issue, said the minister adding that unfortunately, everyone asks them about agriculture.
After petroleum, Pakistan’s biggest import bill is for food items, said the minister, adding that the Khyber-Pakhtunkhwa government is doing zero procurement of wheat.
An agreement has been reached between the federation and agriculture secretary Khyber-Pakhtunkhwa on wheat procurement, said the minister, adding that the federation is buying wheat in the KP and giving it to the province. If we still do not take sensible decisions, we will not be able to manage food security, he added.
Water reserves are dwindling, said the minister, adding that previous governments gave packages for agriculture, but unfortunately they did not reach the farmers.
“We are also under pressure from Afghanistan regarding food security, due to the Ukraine-Russia war”, said Cheema, adding that according to a 2006 survey, 90 percent of the farmers in Punjab own 12 acres of land. There is no big farmer and they are further being burdened by imposing various duties, said the minister.
He urged for setting up a commission to look into the “agriculture matters” and let the truth be told and the blame game be stopped. The cause of declining agriculture is not one, but there are many issues. The government should subsidize farmers to go for solar, he added.
Cotton has been replaced by maize and rice, said the minister, adding that it is wrong to say that cotton cultivation is declining due to sugarcane.
The committee sought details on the budget allocation received by the Ministry of National Food. Further, the parliamentary panel asked for submitting details of the budget received and used by the ministry and related departments.
However, Jawed Yunus Tabba, CEO, Lucky Textile Mills said, “Heimtextil is the one opportunity, we have each year to meet our regular customers from Europe and from around the world on one platform. We are very excited to be a part of the first Heimtextil edition after the pandemic and most of our buyers have already confirmed meetings.”
Over 2000 exhibitors (combined with co–located events) are participating in Heimtextil, Techtextil and Texprocess 2022. Heimtextil Summer Special, Techtextil and Texprocess open their doors in Frankfurt from 21 to 24 June. After the Corona-related break, exhibitors and visitors are looking forward to personal interaction. Over 120 exhibitors from Pakistan will be present at the three shows in June.
Pakistan will have direct exhibitors such as Lucky Textile Mills, Sadaqat Limited, Gohar Textile Mills, Nishat Chunian, Nishat Mills, Adamjee Enterprises, Master Textile and Sapphire Finishing, as well as a national pavilion organized by Trade Development Authority Government of Pakistan.
ACS Textiles, Momtex Expo Limited, Noman Terry Towel Mills, Zaber & Zubair Fabrics and many more from Bangladesh will showcase their products.
Khurram Mukhtar CEO, Sadaqat Limited said, “Heimtextil is the perfect platform for showcasing our vast design potential. It’s also the ideal place to meet with our customers and introduce them to the latest trends. We are looking forward to meeting our customers after the span of a pandemic and having a fresh start.”
Techtextil promises a wide variety and breadth of product offerings as well as innovative strength on the part of suppliers – from carmakers, fashion designers, and medical technology specialists to industrial specialists. Exhibitors at Techtextil offer innovative materials for all requirements.
Sustainability is a theme that runs through all sectors of the textile value chain, triggering processes and releasing enormous innovative power in the process that’s why it is being given emphasis.
Denim Future Lab: The denim production of the future in hall 8.0, the future of the Denim industry will be spotlighted.
The Denim Future Lab highlights the industry’s innovative approaches and presents advancements along many stages of the Denim processing chain.
At Texprocess, international manufacturers will showcase the latest machinery, equipment, processes and technologies for garment manufacturing and textile and flexible materials – ranging from design, cutting, sewing, knitting and embroidery to finishing, IT and logistics. Next edition of Heimtextil will be held from 10–13 January, 2023.
Separately, Coordinator Federation of Pakistan Chambers of Commerce and Industry Talat Sohail termed the budget as balanced in difficult economic conditions and expressed his concerns over cotton. Finance Minister mentioned crops like sunflower, canola, etc., but unfortunately did not mention cotton. However, cotton contains 60% cotton seed which produces edible oil. The increase in cotton production is due not only to cotton lint but also to edible oil. In the budget proposals, we had demanded abolition of taxes on cotton seed oil, cotton seed and oil cake. This can lead to difficulties and obstacles in increasing cotton production.
Several ministers, including the finance minister, supported our demand but did not even mention it in the budget, he said.
Only increase in cotton production can lead to appreciation of rupee, reduction of unemployment and stabilization of economy, he said.
Saqib Naseem, Chairman Pakistan Yarn Merchants Association (PYMA), and Muhammad Junaid Teli, Vice Chairman, Sindh & Balochistan region, have drawn attention of Minister for Finance & Revenue, Miftah Ismail over anomalies in federal budget 2022-23.
They elaborated that polyester filament yarn (HS Code 5402.3300, 5402.4600, 5402.4700 and 5402.5200), also known as manmade yarn, is the basic raw material for Pakistan’s textile industry. The share of cotton in global fibre consumption has fallen from nearly 70 percent back in 1960, to only 27 percent by end-2020. Its place has now been captured by synthetic or man-made yarns.
“A very large SME sector of Pakistan’s textile industry (more than 500,000 looms and knitting machines) consumes polyester filament yarn. The commercial importers of polyester filament yarn act as financiers to this SME sector and entertain the requirements of this SME sector using their own capital and resources”, they said.
Saqib Naseem and Junaid Teli added that we have seen in the past that whenever the difference in WHT is more than one percent on commercial imports v/s industrial import, majority imports of polyester filament yarn shift towards industrial imports which leads to corruption and misuse of this facility and to the exchequer.
They further said that polyester filament yarn falls under the category of raw materials (SRO 1125) and in the previous budget FY 2021-22, the government imposed WHT at import stage one percent for industrial importers and two percent on commercial. However, in the federal budget 2022-23, the government has kept WHT at one percent for industrial imports falling under SRO 1125 whereas commercial importers shall be charged WHT at 3.5 percent with MTR and at 4 percent with FTR. Polyester filament yarn tariff already exists in the cascading system of polyester value chain and it is already on the higher side.
They urged Minister for Finance & Revenue, Miftah Ismail to kindly continue with two percent WHT with FTR on commercial imports on items falling under SRO 1125. Furthermore, in view of information from reliable sources, it has been learned that the government may impose ACD & RD on polyester filament yarn (HS Code: 5402.3300, 5402.4600, 5402.4700 & 5402.5200.
“Since these are basic raw materials of the textile industry, therefore we are requesting you not to impose any ACD and RD on these HS Codes. We would also request you to rationalize Customs duty tariff of Poy (5402.4600) & Polyester Filament Drawn Yarn (PFDY) at seven percent instead of present 11 percent.”
Copyright Business Recorder, 2022