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KARACHI: An alarming drop of 2.5 million bales (34.39%) is expected in local production of cotton. However, the price of cotton remained stable under the influence of rising dollar. In order to fulfil the conditions of the International Monetary Fund (IMF), the government has withdrawn the incentives given to export industry. Recent increase in the interest rate by 3% is not only destructive for the country’s economy, but it is being termed as a ‘death warrant’ by industry.

The crisis of the textile sector has become very serious. Withdrawn of farmers’ incentives will affect cotton and other agricultural produces. For the stability of the Pakistani economy, special attention should be paid for a substantial increase in cotton production.

In the local cotton market, the price of cotton remained stable during the last week. At the start of the week, some groups of textile mills showed interest in buying cotton. Later, on Wednesday, the rate of dollar suddenly started to increase after that ginners were cautious and started demanding higher prices, while the spinners remained silent due to higher prices.

The government has withdrawn the subsidies on energy given to five export industries, including the textile sector, in order to meet the IMF conditions due to which the price of electricity has reached at Rs 40 per unit from Rs 19 per unit.

The interest was also increased by 3% from 17% to 20%, and the inter bank rate of dollar after an increase of 19 rupees reached at 286 rupees. It reached to 300 rupees in the open market but later it reduced a little bit.

Due to the unsustainable rise in interest rates and the rise in the cost of energy, some industrialists and economists called it a ‘death warrant’ not a disaster for the economy. The textile sector has already been in hot waters and. Its crisis will become more serious and unemployment will reach to its peak

The textile sector, which plays a key role in the country’s economy, export and employment, is on the brink of collapse. All Pakistan Textile Mills Association (APTMA) has requested the government to restore energy concessions as the industry is unable to survive because in the regional countries energy prices are relatively low, making it impossible for the Pakistani textile sector to compete with them.

However, due to the extremely high rate of the dollar, the exports of textiles, etc., will increase, while on the other hand, the prices of imported raw materials, accessories, etc., and inputs will also increase enormously.

Cotton demand and prices are expected to rise in the domestic cotton market, but cotton stocks in the domestic market are very low while delivery of imported cotton is delayed due to L/C issues and due to sharp rise in dollar prices. Due to this, the value of imported cotton will increase.

The price of cotton in Sindh province was in between Rs 19,000 to 20,500 per maund depending on the quality, which is available in small quantity. The price of Phutti in Sindh was in between Rs 6500 to Rs 8500 per 49 kg.

The rate of cotton in Punjab was in between Rs 19,000 to Rs 20,000 per maund while the rate of Phutti was in between Rs 7,000 to Rs 9,500 per 40 kg. The prices of Banola Khal and oil prices were relatively stable.

The Spot Rate Committee of the Karachi Cotton Association increased the spot rate by Rs 2,00 per maund and closed it at Rs 20,000 per maund.

Chairman Karachi Cotton Brokers Forum Naseem Usman has said that the rate of cotton remained stable in international cotton markets. According to the weekly USDA export report one lac and seventy thousand and six hundred bales were sold for the year 2022-23. China was at the top by buying 81 thousand 600 bales. Vietnam stood second after buying 78,900 bales, including 900 bales from China and 100 bales from Japan. India bought 18,400 bales and stood third.

Ninety thousand and two hundred bales were sold for the year 2023-24.

Pakistan was at the top by buying 8,000 bales. Thailand bought 7,000 bales and came second. Indonesia bought 2 thousand 200 bales and ranked third.

Seed cotton (Phutti) equivalent to over 4.8 million or exactly 48,75,222 bales have reached ginning factories across the country till March 1,2023 registering decrease of 34.49 percent as compared to corresponding period of last year.

According to a fortnightly report of Pakistan Cotton Ginners Association (PCGA) released on Friday, over 4.8 million or 48,56,178 bales have undergone the ginning process, i.e., converted into bales. Cotton arrivals in Punjab were recorded at over 2.9 million or 29,96,203 bales registering a decrease of 23.74 percent as compared to corresponding period of last year when arrivals were recorded 39,28,690 bales.

Sindh generated over 1.8 million or 18,79,019 bales registering a decrease of 46.51 pc as compared to the corresponding period of last year when arrivals were recorded 35,13,143 bales.

Textile sector bought 44,21,007 bales while exporters purchased 4900 bales and Trading Corporation of Pakistan (TCP) didn’t buy during the cotton season 2022-23.

Sanghar district of Sindh topped with 8,13,526 bales followed by Bahawalnagar district of Punjab with 6,06,914 bales. Total 97 ginning factories were operational in the country. Exactly 4,49,315 cotton bales unsold stock was available in ginning factories

Naseem Usman, chairman of Karachi Cotton Brokers Forum, while commenting on the report, said that this year according to the estimates of the government the production of cotton in the country will be one Crore ten lac bales, but cotton crop was damaged in the cotton producing areas of Sindh, Punjab and Balochistan due to torrential rains and floods. Due to above mentioned reasons 60 lac less bales were produced then the initial estimates.

The total production of cotton this year is expected to be around 50 lac bales which is twenty five lac sixty thousand and six hundred and eleven bales less than the production of seventy four lac and forty thousand and eight hundred and thirty three bales during the same period last year.

Under the influence of severe recession in international markets, the local textile sector is also suffering from a severe crisis.

Generally, the consumption of cotton in the country is about 1 Crore forty lac to fifty lac but this year due to the crisis and closure of fifty percent textile sector the consumption of cotton will be around one Crore ten lac to twenty lac bales. Textile spinners will have to import seventy lac bales to meet their demands. Up till now import agreements of fifty lac bales have been signed.

Coordinator Federation of Pakistan Chambers of Commerce and Industry Malik Sohail Talat said that 34.49% cotton shortage was recorded in Pakistan as compared to the previous year, which is the main factor in the destruction of the economy. The ruling elites are in a tug of war for their power acquisition and survival, while the country’s agriculture, industry and economy is on the verge of collapse.

Every year, billions of dollars are being invested in the import of cotton, due to which the Pakistani currency has reached around 280 rupees per dollar, while a 3% increase in the total mark by the State Bank of Pakistan will prove to be a further disaster for the industry.

For the stability of Pakistan’s economy, special attention must be paid to the substantial increase in cotton production; otherwise, the nation will never be able to get freedom.

Copyright Business Recorder, 2023


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