October 31, 2003	Friday	Ramazan 4, 1424

KARACHI, Oct 30: Pakistan’s prestigious multi-billion rupees foreign exchange earner textile industry is proving a house of wax which has started melting under the heat of rising prices of cotton.

The impact of infestation in cotton crop in Punjab and reports of cotton crop losses in China and India will be discussed sometimes early next week when the government convenes a meeting of Textile Board in Islamabad. But unofficial reports suggest closure of five textile mills as the cotton prices shoot upto new heights of Rs3,500 (sales tax not included) a maund.

Press reports suggest that cracks have started appearing in the rich men club—All Pakistan Textile Mills Association (Aptma)—from where two more powerful textile groups have quit. Two powerful textile groups (Nishat and Kohinoor) had already announced their withdrawal from APTMA about a week ago.

These four groups own among themselves over a million spindles. A loud whisper going around APTMA circles blame these four big groups with about a half dozen more textile groups for being responsible in pushing up the cotton prices up to unprecedented levels.

About eight or ten big textile groups controlling about 2.2 to 2.4 million spindles went for massive buying of cotton when farmers in a few districts of South Punjab raised their demands for cotton seed (phutti) to Rs1,000 a maund from about Rs700 a maund sometimes early October. Cotton seed prices at one time is reported to touched Rs1,600 a maund but then came down to Rs1,300 a maund.

Textile mills are reported to have purchased 36 per cent more cotton by mid-October this year as against their buying in same period last season. This panic buying of cotton was despite the fact that cotton arrivals in Punjab ginneries was about 77 per cent more this year than last season.

More than 60 per cent of 1.5 million bales sold out by the ginneries till October 15 this year was reported to have been bought by eight or ten big textile groups directly or through their agents. All other textile mills were reported to have bought together hardly half a million bales and most of them had to withdraw themselves from this buying race when prices went beyond Rs3,300 a maund.

The APTMA was reported to be making a move for voluntary suppression of cotton buying by its members to what one miller says “counter the black mailing of growers and ginners.” This proposal was echoed at a meeting of textile business leaders on October 21 at the Federation of Pakistan Chambers of Commerce and Industry. One of the textile leaders openly blamed hardly half a dozen textile mills for going into wild purchase of cotton that has led to price escalation. The prescription was to put a halt on cotton buying. “It will compel ginners and growers to offer their product at a reasonable price,” a textile leader had remarked on October 21 at the FPCCI meeting.

“Controls, regulations and rationing are the methods used during time of distress,” a textile exporter told this correspondent while explaining that APTMA might have been considering to impose a voluntary cotton purchase quota on its members. This could have been based on spindle and rotors strength of the textile units.

The APTMA members believe that their senior partners were not ready to observe any such condition and opted to quit their organization rather than bringing any discipline in the cotton market.

Textile sources indicate that their leaders in Textile Board may propose a close monitoring of cotton purchase, cotton consumption, production and all other operating details. “Textile mills should not be allowed to purchase more than eight weeks requirement,” a textile mill owner said. This will ease buying pressure and price should stabilize at around Rs3,000 a maund.

Millers are apparently relieved to hear estimate of cotton crop at about 10 million bales given in the meeting of Federal Committee on Agriculture (FCA) held on Wednesday at Islamabad. Punjab is reported to have given an initial crop figure of 7.6 million bales while Sindh expects 2.3 million bales. Growers in Punjab are expected to extend their picking beyond December in January as they are getting good return. “In any case the crop is bound to give 9.5 million bales even if pest infestation has caused a big damage,” the miller said.

Pakistan had been a net cotton importer for last five years and would do so this season for about 1.5 to two million bales. But millers are considering economy measures by shifting to fine count yarns and re-use of wastages.