2017-18 budget proposals include suggestions for cotton policy

A meeting of the Member's of Karachi Cotton Broker's Forum and Member's of Broker's Advisory Committee was held on Thursday 30th March 2017 in Karachi Cotton Exchange Building Trading hall. The meeting was chaired by Chairman Naseem Usman and it discussed the various points and decided to send following proposals to government requesting for their earliest implementation.
The present federal government is requested to include below proposals in the ensuing Cotton policy, federal budget which is expected to be announced shortly: To Re-open hedge contract of Raw Cotton in Karachi Cotton Association. The federal government has already accorded its approval on 24-03-05 for the commencement of cotton futures trading under the Karachi Cotton Association (KCA).
The SECP ex-Chairman Razi Ur Rehman stated in a APTMA meeting held on the 28th February 2008 in Lahore that hedge trading contract of lint cotton should be resumed in about 03 to 04 month time. We there fore request that the government should ensure the resumption of cotton futures trading at the earliest.
In the absence of hedge trading, cotton market has seen wild & wide fluctuations in price, which resulted in defaults in local and also in export trade. The cotton brokers believe that the federal government would take action under the leadership of president Mamnoon Hussain and prime minister Muhammad Nawaz Sharif, this will go a long way to normalise the cotton market it will also give-employment to thousands of workers in the-cotton trade moreover, the cotton futures market will stabilise the cotton price and reduce the price fluctuations in the market.
The cotton brokers forum now urge the federal government to implement the decision of opening the cotton futures market without further delay. Naseem Usman, Chairman, Cotton Brokers Forum has expressed his concern over the decision of the SECP for granting permission to the Pakistan Mercantile Exchange Limited for introduction of futures trading in cotton.
It is also interesting to note that the US cotton comprises only about 15 percent of the world crop and only US cotton is tender able in NY Futures Contract. Hence it is not understandable how NY futures market will provide any kind of risk mitigation for Pakistan.
PMEX claims that their contract is based on NY futures contract. However this is another anomaly as NY futures is a deliverable contract whereas PMEX contract does not involve physical delivery. Naseem Usman said that realising the need, utility, benefits and advantages of hedge trading in cotton. The Federal Cabinet in its meeting held on 24-03-2005 decided to resume hedge trading in cotton under the aegis of the KCA, however, necessary notification of the government in this regard has not yet been issued due to vested interests.
Naseem Usman urged upon the government to order to allow the KCA to manage the cotton futures market the suspension of Notification issued for introduction of futures trading in cotton at the PMEX in order to discourage speculations, gambling and voyeurism in the cotton market and safeguard the interest of cotton economy as well as national interest.
He also urged the government to suspend the notification issued for introduction of futures trading in PMEX and emphasised allow the KCA to resume hedge trading in cotton exchange under aegis of the KCA as it full infrastructure, Comprehensive by-laws, skilled and experienced man power, 320 cotton brokers dully registered with the KCA to run Hedge Trading in cotton effectively and smoothly.
We there fore appeal to the Hon' able president of Pakistan, Prime Minister, Federal Ministers of Finance, Commerce, Agriculture and Textile to look into the matter seriously and immediately order to resume hedge trading of cotton in KCA, thus saving the cotton trade as well as country's economy.
FREE TRADING IN COTTON Free trading in cotton should be continued which safeguards the interests of all the stakeholders including the growers. The government should announce comprehensive cotton policy, fixed the minimum sport-price of seed cotton Since Pakistan is one of the major buyers of Indian cotton, so to promote the interest of trade, more & more entry points on the Pakistan India border should be established for smooth flow of cotton.
MEASURES MUST BE TAKEN TO INCREASE COTTON PRODUCION Steps should be taken to increase the cotton production on the war- footing basis in the coming years to meet the rising requirement of the local Textile industry, and also consider activating the research Organization departments accordingly.
Special emphasis should be laid on quantity and quality of cotton equally as Pakistan is lacking behind in both these areas. They urged that the government to make sowing of BT quality of cotton official with proper scientific in puts to increase the productivity and production of cotton. By the grace of almighty Allah in 2011-12 and 2013-14, Pakistan achieved an all-time high cotton crop production of 15 million bales. In coming kharif season cotton production target fixed by Federal Cotton Committee (FCC) about 14.04 million bales but last two consecutive years our cotton production fail to reached target and drastically decreased about 33 percent which cause big loss to cotton farmers and national exchequer.
WITHDRAW PROVINCIAL TAX ON BROKERAGE Provincial tax Brokerage is unjustified please, withdraw the same, we are already paying 12 percent Federal Income Tax and Sales Tax WHT etc.-PR