The latest release of fortnightly cotton arrival and disposal figures strengthen the idea of a bumper cotton crop equivalent to 14.0 million local weight bales and no surprise if the production figures beat the historically high record of 14.347 million bales produced in 2005-06. . We append below the arrival figures of three seasons as under: (Figures in Million local weight bales)
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1st. January Sindh Punjab Total Season's unsold
crop stocks
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2012 2.41 9.63 12.04 14.0 1.70
2011 3.41 6.75 10.24 11.7 1.17
2010 4.02 7.91 11.93 12.7 1.27
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Source: PCGA On studying the arrival figures of last six years up to 2010-11, we conclude that 88.02 % crop had averagely reached ginneries by 1st.January. If we apply the same average of 88.02 % on current season's arrival of 12.04 million bales by 1st. January 2012, this season's total crop comes to 13.69 million bales which appears quite pragmatic. In 2004-05 season, Pakistan produced record high crop of 14.347 million bales and by 1st. January, 2005, 91.31% of total crop had reached ginning factories. If we look at the cotton arrival and production statistics, we come to the conclusion that cotton harvesting has gone earlier and the duration of harvesting has decreased comparatively. If we go some 15 years back, we come to the result that the six season's ( 1994-95 to 1999-2000) average arrivals up to December month was 78.66% whereas six years (2005-06 to 2010-11) average comes to 88.02 % ie about 10% more.
As such, season's total crop this time may beat the record high arrivals of 14.247 of 2004-05 season and the cotton trade appeared quite sure of harvesting a record high crop of over 16.0 million bales this season if our crop would have escaped the heavy damage through heavy rains and devastating floods. However, chance was missed and may hardly come in next couple of seasons. The interesting point is that proportion of Punjab share in total production crop is seen increasing and if this trend continues in coming seasons, Punjab crop may be in the range of 11-12 million bales.
This is the second consecutive season that inclement weather ie heavy rains and floods, have severely damaged cotton crops in Sindh. Let us hope for better next season but cotton growers have become dejected as they have not been cared and compensated duly and fears are there for reduction in cotton area next season.
The news of Governmental intervention in cotton market has become over one month old. Meetings with concerned stakeholders were held but failed to produce any concrete results. Last meeting was held on 3rd. January-12, under the umbrella of Ministry of Textiles and next meeting is scheduled on 10th instant coinciding with the ensuing the Economic Coordination Committee (ECC) on the 10th instant.
It does not appear logical that meetings held under Ministry of Textiles would approve schemes favouring cotton growers against the reservations of All Pakistan Textile Mills Association, a very power and apex textile body under textile ministry. Now, the scheme of cotton procurement through Trading Corporation of Pakistan under Governmental control appears losing its efficacy and practicality as time has run out.
However, the purpose of the Government has been achieved to a greater extent with the increase of 12-15% cotton prices in the domestic market. One can refute this claim on the plea of 10 cents increase in New York futures ( 85 to 95) in one month's period which amounts to over Rs 730 per maund. If this increase in domestic cotton prices is taken as a result of the recent increase in New York cotton futures then there was no increase in cotton prices due to possible Governmental intervention.
However, the time for Governmental intervention has gone as 90% cotton crop has already reached ginning factories. However, the Government should imperatively compensate the growers of the damage to their crops directly in a suitable way. The matter of shortage of Government funds is also a major factor constraining the implementation of this scheme.
Once the trade circles especially those of the cotton growers and ginners who favour the Governmental Intervention in cotton market, believe that Government may not come to their help, the cotton market may start shedding the recent increase in prices if the International market does not support any increase in price. Local trade and industry conditions are very poor and severe shortage of gas and power has started paralysing almost all industries especially the spinning, weaving, towel manufacturing, sizing and garment manufacturing and knitting sectors which is very instrumental in national exports. As such, the targets of economic growth, exports, revenue and tax collection may be missed.
The debt burden is increasing with the decreasing value of our currency against US Dollar which has crossed the level of Rs 90 a US Dollar. Our economy may be under greater pressure in next couple of years when IMF loan instalments would fall due for payment. Still there is time to counter all these problems provided the Government has the will and commitment and other political parties lend a helping hand to the Government but the chances appear remote. As such, very hand and difficult situation may emerge in coming months rather years making the life of the common people more and more difficult and hard.