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CE encourages cotton growers

DR ZAFAR HASSAN

LAHORE: In what appears to have been a symbolic gesture to encourage the cotton farmers, Chief Executive Pervez Musharraf announced at a select gathering of growers, businessmen and traders last weekend in Multan that the government would buy the entire quantity of seedcotton (kapas/phutti) to give a fair price to the growers.

The Chief Executive reportedly told the gathering that the Trading Corporation of Pakistan (TCP) would procure all the seedcotton from the growers because suitable benefit was denied to them due to the wrong policies of the erstwhile Government of Pakistan Muslim League.

At present, however, the TCP has neither the staff, nor the resources, or the requisite funds to purchase the entire seedcotton produced in Pakistan. It is true that the cotton growers suffered this year due to very low prices. Nevertheless, the TCP does not have the required expertise or the infrastructure to undertake such a stupendous job.

However, the cotton community should welcome the statement of the Chief Executive that the profits accruing to the TCP would be given to the cotton growers. Reacting to the proposal of the Chief Executive for the government to buy the entire seedcotton stocks, several leading growers and ginners felt it would be better if the TCP would only enter the role as a supplemental buyer to stabalise cotton prices in a weak market. However, other textile millers and cotton traders were of the opinion that ultimately a free economy would be more beneficial to the cotton crop than any type of government intervention.

The exporters have also always desired a free cotton economy in Pakistan. Previously public sector intervention in Pakistan led to mass corruption and large distortions in the marketing system of cotton.

Lint prices have reportedly gone up by Rs 25 to Rs 50 per maund (37.32 kgs) over the previous two or three days. The exporters have been quite active in the market in recent days. Till the afternoon, total transacted business was reported at around 7,000 bales while the tone of the market continued to be steady. While many of the larger mills have covered their cotton requirements quite adequately, several of the smaller spinning units have been left out who are now finding the lint prices on the relatively higher side.

The exporters are generally covering their requirements at prices ranging from Rs 1,700 to Rs 1,800 per maund (37.32 kgs), including their short-covering against their earlier foreign sales. However, it appears that at prices exceeding Rs 1,800 or Rs 1,850 per maund business turnover goes down in the market.

While 500 bales of cotton of seedstuff (better grade) quality sold from Tando Adam in Sindh at Rs 1,700 per maund (37.32 kgs) without the 15 percent sales tax, cotton from Sanghar and Shahdadpur also reportedly sold at Rs 1,700 per maund; 400 bales from Chundko in the Khairpur district sold at Rs 1,725 per maund; 200 bales from Khipro (seedstuff) sold variously from Rs 1,750 to Rs 1,800 per maund, while 400 bales from Ghotki are said to have been sold at Rs 1,850 per maund on Tuesday.

Without the sales tax, 252 bales of relatively lower grade cotton from Bahawalpur in the Punjab reportedly sold at Rs 1,740 per maund (37.32 kgs), 300 bales from Dera Ghazi Khan sold at Rs 1,750 per maund, 900 bales each sold from Yazman Mandi and Gojra at Rs 1,810 per maund, 600 bales from Lodhran sold at Rs 1,825 per maund, 649 bales from Khanpur and 1,000 bales from Yazman Mandi sold at Rs 1,850 per maund. Cotton sales tend to taper off when lint prices move higher than Rs 1,800 or Rs 1,850 per maund.

The domestic manufactures of polyester staple fibre (PSF) have increased its price by Rs 4 per kg from February 21, 2000. The PSF manufactures justify the increase due to the sudden increase in the price of furnace oil, besides the global increase in crude oil prices.

Fabric manufactures and exporters say increase in PSF prices will substantially increase the prices of blended yarns and fabrics, as this increase in PSF price is very steep.

According to the ginners in Sukkur, the local administration there is harassing them by stipulating very high prices for seedcotton. The ginners are reportedly refusing to pay higher rates for seedcotton fixed by the local administration in an arbitrary manner.

A state of siege has reportedly been laid around the ginning factories in Ghotki and Sukkur by the local administration.

The ginners claim that the prices of seedcotton should be co-related with the prices of lint (ginned cotton). The ginners desire that they should be consulted while fixing the cotton prices. While it is laudable to arrange better terms for the growers, it may not be done by forcibly extracting them from the ginners or any other cotton sector.