ASMA RAZAQ

ISLAMABAD ( 2008-11-22 04:32:38 ) :The Finance Ministry has released Rs 5 billion to the Trading Corporation of Pakistan (TCP) for cotton procurement, well-placed sources told Business Recorder here on Friday. The prices of phutti and cotton are decreasing in the domestic market as cotton prices have decreased to Rs 2700 from 2900 per 40 kg, while phutti prices have gone down to Rs 1200 from 1400 per 40 kg.

Sources said that for the procurement of cotton from the ginners, the Finance Ministry has provided Rs 5 billion to the TCP. They said that a meeting would be held on November 25 between the representatives of Pakistan Cotton Ginners Association (PCGA) and the government officials including the Chairman TCP, and the secretaries from Finance, Textile and Commerce Ministries in which the proposal regarding the support price of cotton would be finalised.

There are almost 500 ginning factories across the country that have stopped procurement of cotton from the growers due to non-availability of credit limits to buy phutti from growers and constant operational losses due to declining prices of cotton in the local market.

The chairman PCGA, M Akram Chaudhry told this scribe that "Our credit limits have expired. Earlier the Ministry of Food, Agriculture and Livestock (Minfal) had written a letter to the State Bank of Pakistan (SBP) for enhancing the cash limit for ginning units to save them from the financial crunch and in response, the Governor SBP, Dr Shamshad Akhtar wrote a letter to the ginners in which she agreed to extend the credit limit but no progress has been made in this regard".

He added, "We have to make payments of billions of rupees to the growers but with no cash flows, we are unable to offer a better return to the growers for their crop". Low buying of cotton by the textile sector from the ginning factories has also become a major problem.

When this scribe contacted a textile exporter, he said on the condition of anonymity, "We are forced to keep our buying of cotton low from the ginning factories as our export orders have decreased to 30 percent as compared to the last year. R&D for apparel sector has not yet been issued by the government despite its tall claims".

He added that the provision of 2 percent increase on discount rate is alarming for the textile sector, which has already become uncompetitive in the global market due to high cost of production.

Cotton is the main cash crop and Pakistan is the fourth largest cotton producer in the world. According to the latest cotton arrival report released by PCGA, the arrival of 7.17 million bales has been recorded in the ginning factories as on November 15, 2008 against 5.89 million bales during the same period of last year depicting an increase of 18 percent.

The report says that 4.90 million bales have arrived in the ginning factories of Punjab as on November 15, 2008 against the arrival of 4.45 million bales during the same period last year. This clearly indicates an increase of 18 percent.



Copyright Business Recorder, 2008