March 11, 2002	Monday	Zilhaj 26, 1422

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MULTAN, March 10: Cotton prices remain depressed despite government announcements that the Trading Corporation of Pakistan (TCP) was going to act to stabilize the market.

As much as 1.7 million bales of lint are lying unsold with the ginneries across the country. The monetary value of the unsold stocks is said to be around Rs 14 billion. This is the amount ginners owe to growers and banks. Consequently, the whole rural economy has been paralyzed due to the non-payment of dues of various segments of the agriculture sector.

To ensure minimum price of Rs 780 per 40 kg of phutti (seed cotton) to growers, the government had announced that the TCP would procure one million bales from ginners at a benchmark price of grade-III lint cotton, that was, Rs 1,855 per maund (37.352 kg).

The State Bank of Pakistan also advanced a creditline to the tune of Rs 10 billion to the TCP to carry out the price stabilization operation in the cotton market.

The All Pakistan Textile Mills Association (APTMA) was not happy over the arrangement and its chairman openly criticized the government’s cotton policy. Bureaucracy in the Commerce Ministry allegedly served the cause of the APTMA by hampering the smooth functioning of the TCP. The fact is reflected through the TCP procurements by the end of February, which were hardly 20 per cent of its mandated procurement target.

Last week, a Pakistan Cotton Ginners Association (PCGA) delegation met Commerce Minister Razzaq Daud to apprise him of the situation in cotton market due to ‘deliberate cautious’ buying by the APTMA members and TCP. The rate then was fluctuating around Rs 1,600 per maund of lint.

It was decided in the meeting that the TCP would immediately enter the market effectively and all the roadblocks in its smooth functioning would be removed forthwith. It was further decided that the corporation would lift an average of 500 bales from each ginnery in mill-packing.

It may be added here that TCP procures lint cotton in export packing but due to its inaction the ginners prepared most of their produce in mill-packing to sell to the single-largest buyers of local cotton, the textile and spinning sector.

The minister reportedly admitted the fact that it would be difficult for ginners to repack the bales in export packing and asked the TCP to also procure in mill-packing.

While the corporation is yet to enter the market effectively, APTMA members have, at their own, increased the buying price of various grades from Rs25 to Rs50.

In the meantime, the association has also started pressurizing the commerce ministry not to procure the cotton in mill-packing as it is meant for them (millers). But the price is still Rs 150 to Rs 200 below the market stabilization price of Rs 1,855 per maund.

After being disappointed by the ministry, the PCGA recently sent an SOS call to the president of Pakistan, General Pervaiz Musharraf, to take stock of the situation.

CONTAMINATION: Another initiative which the federal commerce minister took on the insistence of APTMA was the introduction of supervised ginning scheme in Rahim Yar Khan district to produce contamination-free cotton.

In its study, APTMA claimed that the country had suffered a loss of $1,426 million in its exports due to contamination in cotton.

The scheme was launched with a lot of pledges both from the government and the APTMA to make it successful by giving a premium of Rs 200 per maund of contamination-free cotton and Rs 75 on less-contaminated lint cotton.

Growers and ginners remarkably shifted to cotton cloths from jute bags to carry phutti from field to ginneries. Similarly, the ginners installed weigh-bridges and constructed platforms at their factories in the district to meet the criterion of contamination-free cotton production. There are some 125 ginning factories in Rahim Yar Khan district and installation of weigh-bridge at each factory cost Rs 1 million.

But the government (TCP) and the APTMA paid no premium against any purchase from the district. The TCP procured only 16,100 bales up to March 1. Of the arrival of 1.21 million bales by the end of February, 0.25 million bales of supervized ginning scheme were lying unsold.

Cotton market analysts say that betrayal by the government and textile sector will hit the drive to produce contamination-free cotton in other parts of the country.