Traders in the cotton market are hopeful that situation in the cotton market will start improving very soon as the Punjab and Sindh governments have allowed the whole textile supply chain to start their operations.
However, market sources said that ginners were under pressure because they were unable to sell 5 lac bales of cotton of worth Rs 20 billion which was lying under open sky and there was no buyer because of the lockdown due to the coronavirus.
Pakistan Cotton Ginners Association has appealed to the Prime Minister Imran Khan, Prime Minister Advisor on Finance Abdul Hafeez Sheikh, Federal Minister for National Food Security and Research Syed Fakhar Imam, PM advisor on Commerce and Textile Razak Dawood and Governor State Bank of Pakistan Reza Baqir that ginners are unable to repay bank loans plus mark-up thus government should waive the mark-up of January to June 2020. They also appealed that bank guarantees cannot be adjusted under prevailing situation it should be deferred for the period of one year.
They also demanded that exemption of oil-cake (Khal) from sales tax be granted through a Presidential Ordinance. Refund claims of withholding tax of cotton ginners be paid which is pending for the last ten years. They reiterated their demand for relaxation in lockdown for Textile, weaving, spinning and other related sectors so that unsold stock could be disposed of and ginners can recover their huge amount of Rs 25 to Rs 30 billion stuck up in the textile sector due to the lockdown.
Cotton Analyst Naseem Usman told that cotton sowing would be badly hit if arrears of growers were not cleared immediately and dream of self sufficiency in cotton could not come true.
He said that government should announce a bailout package for the ginners so that payments to growers could be possible. Cotton stock must be exempted of sales tax, income tax and other taxes. He stressed on the need of the revival of ginning industry which is facing severe liquidity crunch. He said that government should fix the electricity tariff at Rs10/unit like other exportable industries.
Naseem Usman said that both the federal and Sindh government should work together to save the cotton crop from the attack of Locust Swarm in Sindh from May 15, otherwise he warned that cotton production will be badly affected.
He also said that Karachi Cotton Association has decreased the spot rate by Rs 100 per maund and closed it at Rs 8700 per maund. The rate of cotton in Sindh and Punjab is in between Rs 7000 to Rs 8800 per maund. The polyester fiber was available at Rs 160 per kg.
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The KCA Official Spot Rate for Local Dealings in Pakistan Rupees
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FOR BASE GRADE 3 STAPLE LENGTH 1-1/16"
MICRONAIRE VALUE BETWEEN 3.8 TO 4.9 NCL
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Rate Ex-Gin Upcountry Spot Rate Spot Rate Difference
For Price Ex-Karachi Ex. KHI. As Ex-Karachi
on 02-05-2020
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37.324 kg 8,700 160 8,860 8,960 -100/-
Equivalent
40 kgs 9,324 171 9,495 9,602 -107/-
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