Mills import 300,000 cotton bales despite ample local supply

KARACHI: Despite ongoing stockpiling of the new cotton crop, Pakistani mills have entered into import orders of around 300,000 bales, raising questions regarding the crop in the country.

So far, cotton import orders have been made for 300,000 bales. With an increase in cotton consumption, import would likely go up as well because of shortage in the country, traders said.

Experts said that it was a matter of concern when the new crop was arriving in Pakistan.

Cotton prices in the local market remained stable after purchases by the spinners, trader said. Prices in Sindh remained stable, while Rs400 per maund declined in Punjab.

With arrival of seed-cotton, ginning factories have also partially started their operations. According to some estimates, around 100,000 bales would be ready by the end of June, which would be higher when compared with arrivals during a few previous years.

Seed-cotton arrival from Sindh has increased in the mills, which has resulted in opening of around 15 ginning factories in the province, while 10 mills have commenced their operations in Punjab, as partial arrival has also started there.

Some estimates suggest that if weather remained favourable, cotton production would reach around 7.5 million bales to 8.0 million bales.

Peoples related to the textile industry said that some new textile machinery was imported in the country, which would increase cotton consumption.

On the other hand, cotton production has been declining every year and cotton prices in the country are higher by Rs1,500 to Rs2,000 per maund, which has compelled textile mills to import.

The government is giving incentives on other crops while neglecting cotton. Even the dedicated area for cotton crop is not being fully utilised. No concrete measures were taken in the federal budget to improve the crop.

An area of 4.0 million acres was estimated in Punjab for cotton sowing, while only over 3.4 million acres were cultivated. In Sindh, an estimated 1.7 million acres was to grow cotton, but the crop was cultivated on only around 1.5 million acres.

On the other hand, instead of providing incentives to cotton growers, sales tax was increased to 17 percent on lint from 10 percent. Besides, 17 percent sales tax has also been imposed on seed-cotton.

Pakistan Cotton and Ginners Association (PCGA) delegation met with several ministers in Islamabad during the week, but no concrete decision has been received in favour of cotton production. PCGA sources said if their valid demands were not met, they would be compelled to shut down ginning factories and oil mills.

Buyers have complained to the PCGA that they have been affected by some adulteration in cotton, which was made by ginners and sold forward with support of the brokers. Some cotton brokers were also involved in this malpractice. Buyers demanded a stoppage to such activities, which include adulteration of waste with cotton.

During the week, prices remained at Rs12,900/maund to Rs13,200/maund in Sindh, while seed-cotton rates remained at Rs5,700 to Rs5,900/40kg. Rates of cottonseed remained at Rs1,800 to Rs2,000/maund.

Cotton rates in Punjab fetched Rs13,600 to Rs13,700/maund, seed-cotton rates were Rs5,600 to Rs6,200/40kg, while cottonseed fetched Rs2,000 to Rs2,100/maund.

Karachi Cotton Association’s Spot Rate Committee kept the spot rate unchanged at Rs12,600/maund.

Karachi Cotton Brokers Association Chairman Naseem Usman told The News that prices moved upwards in the international cotton market. Lint in the New York Cotton Market traded at 86 to 87 cents per pound. According to weekly USDA report, Pakistan remained the top buyer of US lint with 130,400 bales.

Prices remained stable in Brazil while increasing trend was witnessed in India.

Sindh Minister for Agricultural Ismail Rahu in a statement demanded the federal government to withdraw the sales tax levied on ginning factories and demanded immediate withdrawal of 17 percent sales tax on cotton oil seeds and cotton.

The provincial minister said two years ago, the incompetent federal government had imposed 10 percent tax on cotton, now it has been increased to 17 percent. “Wrong policies of the Niazi government have already caused a lot of damage to agriculture”, he added.