MULTAN, Feb 4: The governor, State Bank, Dr Ishrat Hussain has underlined the need of modernizing ginneries to produce contamination-free quality cotton.

He was addressing the executive committee members of Pakistan Cotton Ginners Association here on Tuesday. Criticising the ginners, he said only the ginning sector was the weak link in the chain of quality cotton production.

He said spinners and weavers had spent Rs1.5 billion during the last three years on the modernisation. He said but without improved ginning practices the desired results were unlikely to be achieved to meet the challenges of 2005.

The State Bank governor said so far the country’s trade had thrived on quota system but after the year 2004 the quotas would be no more a factor in international trade in line with the World Trade Organization agreements. He said in future the country’s industrial and agricultural output would have to compete price and quality in a global market.

He expressed his dismay over preparation on the cotton front saying “our cotton-based industry will find it difficult to compete under the prevailing circumstances.” He also expressed concern over the stagnant production of cotton for the last few years.

Dr Hussain said as against the current 11.5m bales of cotton requirement of the industrial sector for the cotton the country was producing around 10m bales. He said the better per acre yield would not even fulfil the domestic needs but compete on the price as well.

Replying to the ginners’ queries, he said at present the liquidity position of the banks was so strong that they were ready to finance any feasible plan within no time. He said the ginners who suffered losses during the last three years could adjust their bank loans under circular No 29 which would be remained effective up to April 30, 2003.

The ginners, however, contradicted the governor’s point of view that the ginners were taking no interest in modernising their factories. They said in the past some 100 ginners had installed lint cleaners with a cost of Rs5m each to produce quality cotton. But with the abolition of cotton export corporation no one was inclined to give premium price to the factories with lint cleaners. Consequently, the ginners stopped using the cleaners.

Ginners from Rahim Yar Khan and Bahawalpur complained that they employed extra efforts and investment to produce contamination-free cotton after the declaration of their districts as zones of contamination-free cotton. But, neither the millers nor the trading corporation of Pakistan had awarded them the promised premium price. “It is the buyers who are discouraging production of quality lint,” they alleged.

At this, the State Bank governor assured them that he would talk to the federal commerce minister and chairman of Pakistan Textile Mills Association to cooperate on this front.