The National Assembly's Standing Committee on Textile Industry Wednesday recommended a package for cotton growers including zero percent sales tax on fertilisers/pesticides, relief in energy prices and government's intervention in the cotton market to procure seed-cotton at minimum Rs 2,600 and maximum Rs 3,000 per 40 kg to stabilise its prices. The committee recommendations also focused on relief in energy prices to bring down the cost of production and give relief to growers.
Chairman Trading Corporation of Pakistan (TCP) Rizwan Ahmed expressed his inability to procure seed-cotton; pleading that the Corporation has no expertise in the seed-cotton operation; it lacks human and logistic resources. Moreover, the government will have to bear the brunt of upto Rs 19 billion. Chairman TCP further said that it would require Rs 40 billion for the operation, which may open corruption avenues as there is no checking mechanism.
This he stated while briefing the committee which met with Khawaja Ghulam Rasool Koreja in the chair. Ahmad further said that TCP always procures lint cotton and has no expertise in seed cotton. Further the difference between the proposed intervention rate and market rate is about 1800-2000 per 40 kg which is too much. The government always intervenes just for sentiments. He further said that of the 96,000 bales procured last year; only 6,000 bales have so far been sold as nobody is ready to come. He said that provincial governments have resources and may be utilised. He further proposed direct cash subsidy to the growers to give them benefit.
Federal Minister for National Food Security and Research Sikandar Hayat Khan Bosan proposed international tenders as it is possible that some foreign buyers may come. There are mafias everywhere which always discourage standard cotton due to which Pakistani cotton is being traded at 17 cent per pound less price in the international market. According to the FAO grains' and commodities' prices may remain low during next five years which may complicate situation and a meeting with Prime Minister is likely to be held in this regard soon.
About 0.2 million tons of potato has been exported to Russia, however the prices could not be stabilised and growers are not even getting the production cost. He said that intervention on a small level would not be result-oriented; rather the government should slash cost of production. He also proposed that taxes on agriculture sector should be withdrawn. It requires Rs 91 billion to give subsidies on paddy and cotton crops, he added.
The provincial Agriculture minister of Punjab Farrukh Javed said that cotton yarn being produced in Pakistan should not be imported from India rather only long staple cotton needs to be imported. He said the provincial government would require Rs 70 billion to give direct subsidies to growers.
The committee decided to fix the intervention price of seed cotton @ Rs 2,600 minimum and Rs 3,000 per 40 kg maximum for the financial year 2015-16 after considering the cost of production. The sub-committee had earlier recommended fixing the minimum guaranteed price of cotton @ of Rs 2700 per 40 kg for the financial year 2015-16 after considering the cost of production.
During 2014-15, due to fluctuating International lint prices, cotton growers suffered badly; average seed-cotton price during cotton picking season last year remained below the average cost of production. Keeping in view the low market rates of cotton during 2014-15 federal government intervened and started purchasing lint through Trading TCP. Due to bad timing, the intended benefit could not accrue to the farmers and TCP halted procurement operations at 96,000 bales against a target of one million bales.
Secretary Ministry of Textile Industry informed the committee that ministry held a stakeholders' meeting last week and decided to move a summary for procurement of 13 million mounds of seed cotton (equivalent to one million bales) at the price of Rs 3000/40 kg. The summary is being finalised by the ministry of textile industry and will be sent to Prime Minister being Minister In-charge for approval before placing it to ECC of the Cabinet for consideration. The committee recommended sending the summary within seven days to give timely relief to growers.
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