KARACHI: Previous week witnessed stability in the rate of cotton. Stocks are declining day by day. The issue of opening Letter of Credit is still not resolved. Inflation is increasing day by day due to agreements with International Monetary Fund (IMF). End of zero-rated concessions would increase difficulties for textile sector. In order to increase the cotton crop, the intervention price of Phutti should be increased. Substandard seeds and pesticides are affecting the crop yield.
In the domestic cotton market, cotton prices were overall stable during the last week, and business volume was relatively brisk. Textile spinners continued cautious buying. Stock of cotton is decreasing day by day. Keeping in view textile spinners has continued buying as per their needs, though, they can face difficulties in the form of ending subsidies on energy in case of deal with IMF. Despite all this they need cotton to run their mills.
The situation regarding opening of L/C for the import of cotton is still not improved but composites mills exporting textile products can import cotton to some extent.
Demand and price of cotton yarn has started to improve to some extent. After the talks with the IMF, the value of the US dollar has started to fall, due to which cotton prices have started to decline in the last two days. In preparation for the upcoming cotton season, cotton sowing has partially started in some cotton producing areas of Sindh. The sowing of cotton has partially started in the cotton growing areas of Lower Sindh.
Cotton farmers believe that if active seeds are provided, they can adapt to the weather conditions and if antimicrobial active pesticides are provided, then the cotton crop for the next year 2023-24 will be better. Fixing of intervention price of Phutti and setting up of MSP price will be a good step for increasing the production of cotton.
At present, some farmers believe that the MSP should be set at least Rs 9000 because the prices of agricultural inputs have increased enormously, while the government should also provide agricultural incentives for the farmers and implement the Agriculture Package. It was observed that due to lack of proper implementation farmers are not fully benefiting from agriculture package.
The rate of cotton in Sindh is in between Rs 19,500 to Rs 22,500 per maund while the rate of Phutti is in between Rs 6,500 to Rs 9,000 per 40 kg. The rate of cotton in Punjab is in between Rs 20,000 per maund to Rs 22,500 per maund. The rate of Phutti is in between Rs 7,500 to Rs 10,500 per 40 kg. The rate of Khal, Banola and oil remained stable.
The Spot Rate Committee of the Karachi Cotton Association has decreased the spot rate by Rs 200 per maund and closed it at Rs 21,800 per maund.
Chairman Karachi Cotton Brokers Forum Naseem Usman has said that the rate of cotton remained stable overall in the world markets.
The rate of Future Trading of the New York Cotton for the month of March remained in between 85 American cents per pound to 86.50 American cents per pound.
Cotton farmers in India have kept the supply of cotton tight, due to which the price of cotton remained stable. According to USDA’s weekly export and sales report for the year 2022-23, two lac sixty two thousand and eight hundred bales were sold.
China was at the top by buying 87 thousand 700 bales. Turkey bought 72,600 bales and came second. Vietnam ranked third with 45,300 bales. Indonesia bought 16,600 bales and ranked fourth. Pakistan bought 14,000 bales and stood at the fifth position. Thailand bought 3,300 bales for the year 2023-24.
On Tuesday, in connection with the revival of cotton crop, a meeting was organized with the owners and growers of some of the largest registered cotton seed companies of Sindh, organized by the members of the Karachi Cotton Brokers Forum and the Karachi Cotton Association’s Brokers Advisory Committee. Chairman of Karachi Cotton Association, Atif Dada, Vice Chairman Rizwan Iqbal and Secretary Aftab also attended the meeting.
On behalf of the seed companies, Nadeem Shah, owner of Matiari Seed Company, who is also the President of All Sindh Seeds Association and Vice President of Sindh Abadgar Board, Imtiaz Ali Soomro, Managing Director of Marvi Seed Corporation Hyderabad, Hyderabad Seed Corporation Chairman Nawaz Ahmed, Atif Nazir of Abadgar Seed Company and Vinod Kumar of Khuzdar Seed Corporation participated the meeting. Naseem Usman, Chandralal and Anil Rajkumar participated on behalf of Karachi Cotton Brokers Advisory Committee.
Nadeem Shah, Chairman of Matiari Seed Company, while talking about the concerns of the seed companies of Sindh province, said that almost 80% of the cotton seed in Sindh province is supplied by the seed companies of Punjab province, and most of the seed companies are unregistered. They buy cotton seed without processing and sell substandard cotton seed due to which the cotton farmers have to suffer irreparable loss. Such fake companies should be closed down, he said. He added we do not object to Punjab registered seed companies, but unregistered companies should be closed down.
He said the registered seed companies of Punjab sell cotton seeds in Sindh province. We have also filed an application against the unregistered companies, but unfortunately, even after two years, no hearing is conducted.
Many other issues were discussed in the meeting. It was noted that there is an urgent need to increase the intervention price of cotton before sowing and the MSP appropriately because the prices of cotton inputs are increasing significantly.
Sindh Seed Corporation was established many years ago in Sakrand where there is about 7000 acres of agricultural land for the production and supply of various seeds, but no benefit is being taken from it. If government is unable to run the corporation then it should be run through partnership with the public private sector.
On the other hand, PICRT and PCCC are active seed production institutions in the country which are working for decades but unfortunately they are unable to give satisfactory results.
The staff of PCCC is complaining and protesting for the non-payment of salaries for the last 8 months. In this situation how research and development is possible, the meeting noted. It said we can take benefit from the experiences of agricultural experts of Turkey, China and Australia to increase agricultural production, especially cotton production. “Our agricultural experts and the experts of private sector registered companies should be sent to foreign countries to get modern technology. Many countries of the world including China in order to provide food to the growing population are making strategy to focus on agriculture rather then industry. Pakistan should also focus on agriculture.
Atif Dada, Chairman of KCA said that KCA also wants to revive the cotton crop in the country. Apart from seed, other problems hindering cotton production should be resolved. The production of cotton in the country could be increased to a maximum extent and it will be helpful in strengthening the economy of the country.
He said that our crops are cultivated with canal water. The production is relatively low. The production of cotton is barely 600 to 625 kg per hectare, while other countries are getting 1800 to 2200 kg per hectare. There is a need to develop high yielding seeds to increase production.
Moreover, in the Economic Coordination Committee, Kissan package and zero rated incentives for export industries were withdrawn due to which the industries will face difficulties. It is expected that government will bring a mini-budget of Rs 170 billion.
Copyright Business Recorder, 2023