KARACHI: Stability in the rate of cotton was seen last week amid a bearish trend in the international markets. Karachi Chamber of Commerce and Industry has requested that the government should allow import of cotton and other agricultural products from India.
Textile sector is in crisis due to cotton and cotton yearn disparity, continuous rise in valued of the US dollar and overall recession in international markets. All Pakistan Textile Mills Association has shown interest in import of African cotton and delegation has left for Tanzania.
The domestic cotton market remained overall stable after the fluctuation in cotton prices during the last week. Due to the increase in the supply of cotton, there was a relative increase in the business volume due to increase in ginning of cotton and also due to rise in the rate of US dollar.
In order to increase the storage of quality cotton, some large groups of mills increased their purchases, while mills which were financially weak were seen involved in a cautious buying. Reportedly, some mills have gone closed while some others have reduced their shifts. Overall, the textile sector is in a state of crisis as there is a disparity in demand and price of cotton yarn as compared to the rate of cotton.
According to the information received from Faisalabad, which is a hub of textiles, the textile sector is in a severe financial crisis; many mills are closed, some other mills are partially running while sizing and dining units and cotton looms are also mostly closed. Unemployment is increasing, as well as, the financial condition of mills in other areas is getting weaker day by day.
Due to stormy rains and devastating floods, the cotton crop has also suffered irreparable damage like other agricultural products. The first estimate of cotton production was 1 Crore 10 lac bales but currently the production of cotton will be around 65 lac bales.
However, it is too early to give estimate at present, but it is certain that the production will be greatly reduced due to which cotton will have to be imported in a large quantity.
Cotton price in Sindh province is in between Rs 19,000 to Rs 22,000 per maund. The rate of Phutti is in between Rs 65,00 to Rs 92,00 per 40 Kg. The rate of cotton in Punjab is in between Rs 21,000 to Rs 23,000 pet maund while the rate of Phutti is in between Rs 8,000 to Rs 12,000 per 40 kg.
The rate of cotton in Balochistan is in between Rs 19,000 to Rs 20,000 per maund and the rate of Phutti is in between Rs 8,000 to Rs 13,000 per 40 kg. An increasing trend was seen in the prices of Khal, Banola, and Banola oil in all provinces.
The Spot Rate Committee of the Karachi Cotton Association kept the rate unchanged at Rs 22,500 per maund.
Naseem Usman, Chairman of Karachi Cotton Brokers Forum, said that the price of cotton in the international cotton markets is also fluctuating. The rate of Future Trading of New York Cotton for the month of December after decreasing reached at 99 American cents while cotton prices have came down significantly in India due to increase in supply with the arrival of new season cotton. According to sources, cotton prices are expected to decrease further in India.
Meanwhile, the All Pakistan Textile Mills Association (APTAMA) has estimated a production loss of $1.5 billion to damage to the country’s cotton crop after rains and floods.
Accordingly, to avoid shortage of cotton in the country, APTMA has decided to explore the international market to ensure procurement of quality cotton at reasonable rates.
A delegation led by Patron in Chief Dr Gohar Ijaz and senior members Fawad Mukhtar and Anwar Ghani has left for Tanzania to procure cotton for Pakistan on reasonable rates and to fulfil cotton requirements in the wake of floods in which cotton crops were destroyed.
It may be noted that Pakistan will have to import more than 65 lac bales this year.
However, businessmen and industrialists on Thursday asked the government to immediately import raw cotton, food items and other essentials from India via the Wagah border to check a food security crisis and curtail heavy logistics costs.
Businessmen Group (BMG) Zubair Motiwala and President Karachi Chamber of Commerce and Industry (KCCI) Muhammad Idrees appealed the government to immediately allow import of raw cotton, vegetables, fruits, grains and other essentials through Wagah as Pakistan faces severe shortages. They said there was a shortage of all these products because of the devastation caused by flash floods, which completely washed away all the agricultural crops.
In a statement, Motiwala pointed out that in addition to the losses of up to billions of rupees, damage inflicted by the floods on agricultural crops and land had triggered a food crisis. Crops were completely damaged, while vast lands remained inundated to date, he added.
The business leader said opening the Wagah border was inevitable now because of the destruction of raw cotton, dates, chillies, cauliflower, onions, and other fruits and vegetable crops in Sindh and Balochistan.
He said that opening the Wagah border would allow imports of agricultural crops from India so that our country’s food needs and also the industry’s agricultural input requirements could be met immediately. From Wagah, imports would be possible within the shortest possible time at competitive rates, Motiwala added.
He stressed that the government has to act promptly and sensibly in this regard to avert a food crises as according to estimates, 65 percent of Pakistan’s main food crops including 80 percent of its wheat and rice have been completely swept away during floods, and more than 3 million livestock have also died.
He reminded that importing from India would reduce the time and logistics cost both. This he said would also be better for the country’s balance of payments situation compared to importing from countries that were farther and had heavier logistics costs.
Recovering from the heavy agricultural losses would take several months, the BMG chairman said, warning that if raw cotton imports from India were not allowed in a timely manner, textile exports would further fall. “Reduced textile exports would worsen the situation for the already ailing and overburdened economy,” he added.
President KCCI Muhammad Idrees said that Pakistan relied heavily on local agricultural products, but now it was obvious that wheat, rice, raw cotton, grains and vegetables, etc., have to be imported.
He reasoned: “it was better to import from India which produces plenty of these agricultural products and also the livestock”.
He said prices of vegetables and other commodities have risen sharply in the local market, making these commodities unaffordable and beyond the reach of the poor segment of the society.
To stabilise prices, and avoid hunger and starvation among masses, he said the government should immediately allow the import of agricultural goods from India.
Apart from this, Federal Finance Minister Miftah Ismail and the Association of Textile Exporters have also advised to import cotton from India, but the government is indecisive due to the Kashmir dispute.
Copyright Business Recorder, 2022