KARACHI: Cotton price was increased by up to Rs 5,000 per maund on the local market. But on the contrary, the prices of cotton decreased in international cotton market.
According to All Pakistan Textile Mills Association due to decline in cotton production the textile sector will have to import $4 billion worth of cotton. Due to low export and economic crisis, about 5 lac people in the textile industry lost their jobs.
Mixed response in Heimtextil, about 250 exporters from Pakistan participated. Punjab Agriculture Secretary called for increasing the cultivation area of cotton. Cotton prices continued to rise in the domestic cotton market last week with textile spinners sourcing their cotton requirements locally mainly due to non-opening of L/Cs and alarmingly low production of domestic cotton. Due to which the stock of cotton is decreasing day by day, and strong dollar is also the main reason.
Since the beginning of the New Year, the price of cotton has increased significantly by Rs 4,000 to 5,000 per maund while there is still potential in the market and the market is stable. The prices of Phutti are also increasing as well as the supply of Phutti is decreasing day by day. There was also an upward trend in the prices of Banola, Khal and oil.
Although the international cotton markets are not increasing relatively much, the main reason behind is the increasing tension between Ukraine and Russia, but China has removed all the obstacles for business, this is a positive aspect for the market.
However, local textile mills continue to purchase cotton. Pakistani companies have participated in large number at Hemtextil world’s largest apparel exhibition held in Frankfurt, Germany from January 10 to 13. It is expected that if Pakistani exporters get orders it will have a positive impact on the local cotton market.
The rate of cotton which is in between Rs 14,500 to Rs 17,000 per maund on December 31, 2022 after increasing by Rs 4,000 to Rs 5,000 per maund reached at Rs 18,500 per maund to Rs 21,000 per maund. The rate of Phutti is in between Rs 6,500 to Rs 8,500 per 40 kg. The rate of cotton in Punjab which was Rs 17,000 per maund after increasing by Rs 5,000 per maund reached in between Rs 20,000 to Rs 22,000 per maund while the rate of Phutti is in between Rs 7,000 to Rs 10,500 per 40 kg.
The Spot Rate Committee of the Karachi Cotton Association increased the spot rate by Rs 3,000 per maund and closed it at Rs 20,000 per maund.
Naseem Usman, Chairman of Karachi Cotton Brokers Forum, said that there was an overall bearish trend in international cotton markets after fluctuations in cotton prices. New York cotton futures settled at 82 US cents per pound after fluctuations. Due to the recession in the world, the demand and prices of textile products are falling and the prices of cotton in the international cotton markets are falling. On the contrary, the prices of local cotton are increasing.
According to the experts local ginners were disturbed due to the sharp fall in cotton prices and now they should take advantage of the significant increase in prices they should sell cotton while some people believe that the stock of cotton in the market is very limited. New crop will arrive in 4 to 5 months due to which it seems difficult that prices of cotton will reduce.
Patron in Chief All Pakistan Textile Mills Association Gohar Ejaz in a statement said that monthly textile exports likely to plummet to $1 billion a month. In FY22 average textile exports were $1.65 billion. In last three month textile exports dropped by 18%. Textile exports currently stood around $1.3 billion.
APTMA sought government intervention to arrest decline in exports. Lower cotton output, imports, delay in LC clearance of accessories and other essentials. Cotton size will be maximum of 5m bales as against requirement of 15m bales. In spite demand curtailment in the World Pak Textile grow by 4% in First quarter of this year compared to last year. One million bales costs $400 million cotton at today’s Price and exports 1.3 Billion dollars for each 1 dollar Textile industry Exports 3 dollars of Manufactured Goods. MOF has to intervene or we will lose billions of dollars of exports.
About seven million people in the textile industry have been laid off due to low exports and the economic crisis. In a press conference held by textile associations on Monday, its representatives said that the government has no policy to ensure and protect the decaying textile industry.
Due to limitations on Letter of credit (LC), the textile sector has been unable to procure essential raw materials worth as low as $5,000 which has affected consignments as high as $500,000. After the floods, Pakistan lost almost 50% of its cotton crops which resulted in cotton demand to be met with imports as well. Given the reliance on imports, the industry faces constraints towards production and fails to fulfill major international orders.
Pakistan Hosiery Manufacturers & Exporters Association (PHMA) has lamented that the import restriction by the State Bank of Pakistan would hinder the smooth process of future export orders, leading to declining foreign inflows amidst depleting foreign exchange reserves which are presently at the lowest ebb in the country.
PHMA zonal chairman Naseer Butt sought the prime minister’s intervention to exempt whole textile export sector against restrictions imposed by the central bank, allowing import of all kind of textile industry raw material to enhance exports growth, as the authorities have placed the import of the textile industry’s raw material on third priority. He said that the hosiery industry is facing undue delay in sales tax refunds and restrictions on import of raw material, resulting into inordinate delay in export orders and damaging the reputation of the country. He called for continuation of Duty Drawback of Local Taxes & Levies (DLTL) Scheme to ensure growth in country’s exports, besides releasing the stuck up claims of 2019-20 under this scheme.
PHMA members are facing severe liquidity crunch due to undue delays in release of sales tax stuck up refunds, besides the hurdles created by the SBP to open LCs to proceed export shipment, he said. He said that refunds of sales tax of exporters should be paid immediately so that the financial difficulties of exporters can be reduced. He said that due to non-opening of LC, we are facing embarrassment in the international market.
Moreover, consignments of industry raw material remained stuck at the port despite the government had lifted the ban on the import. As a result the exporters are facing huge cost of demurrage due to delays, which is an additional cost for the industry. He said the government needs to take immediate measures to arrest the slowdown in textile exports, as these policies would bring Pakistan’s most valuable sector on the verge of collapse.
The PHMA zonal chairman said the government lacks a clear direction and its careless conduct has brought a disaster to the industrial sector and sabotaged exports, as the financial crisis for the exporters outgrows with foreign buyers showing reluctance to place orders with the local textile makers. He said that textile export industries are denied LCs to import raw materials and accessories for manufacturing purposes. Resultantly, the blocking of LCs has wreaked havoc on the export sector, causing a severe disruption and delays in completion of foreign orders. He feared the government’s continuing policy of blocking LCs may lead to the cancellation of international orders.
If the import of raw materials is not allowed, the exporters will not be able to fulfill their orders; he said and added that exporters should be allowed to import 35 percent value of raw material against 100 percent value of export because without the import of raw material, exports cannot be done.
Naseer Butt said that the PHMA wanted to strengthen the sinking economy by increasing domestic exports, which is not possible without allowing import of textile sector’s raw material. He said that due to the poor policies of the present government, around 7 million workers have lost jobs so far, and if the situation continues, the entire industry would lead to shutdown, leading to complete ciaos.
In order to achieve the production targets from the next cotton crop, all the stakeholders will have to work on a comprehensive strategy keeping in view the climate changes. The cultivation of the next cotton crop should be ensured on maximum area and new technology of cotton should be promoted. These views were expressed by Punjab Agriculture Secretary Ahmad Aziz Tarar while presiding over the meeting held in Lahore for the implementation of plan for the upcoming cotton crop.
On this occasion, Agriculture Extension Director General (DG) Dr Anjum Ali gave a briefing and told the secretary agriculture that due to the efforts of the Agriculture Department, during the year 2021-22, the area under cultivation of cotton increased by 16 percent compared to last year, but due to floods in South Punjab, 234,000 acres of cotton were damaged and the production decreased.
Apart from this, due to ongoing climatic changes in the province and due to non-cultivation of approved varieties of seeds, there has been a decrease in production. On this occasion, the secretary said that the emphasis should be on timely sowing of the next cotton crop.
Prince Harry’s book ‘fastest-selling non-fiction book ever,’ says publisher Special attention should be paid to cotton crop’s availability of seeds of improved varieties and coordinate with Irrigation Department for availability of canal water for cotton (especially in the months of April-May in Bahawalpur division). At the tehsil level, the nutrient requirements of cotton plants should be completed by February 2023, and soil analysis should be prioritized in cotton areas, along with modern machinery and subsidies on phosphorous and potash fertilizers.
Agriculture Extension DG Dr Anjum Ali, Agriculture Research DG Muhammad Nawaz Khan Maikan, PARAB Chief Executive Dr Abid Mehmood and other senior officers participated in the meeting.
Copyright Business Recorder, 2023
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