LAHORE, Nov 23: The inter-ministerial committee on cotton is said to have agreed that the Trading Corporation of Pakistan's intervention in the cotton market has "failed to help farmers" , although the national exchequer suffered financial losses.

The committee that met in Islamabad on Tuesday is also said to have decided to prepare a report on the "situation and the results of the TCP intervention for the ECC, the competent forum which had decided to bring the TCP in the market to stabilize the price as well as to ensure that growers get the minimum indicative rate for their crop, for further decision."

Sources present in the meeting told this reporter by telephone from the federal capital that the committee agreed that the chief objective of launching the TCP operations in the cotton market to stabilize it, with a view to helping the growers, remains unfulfilled.

"In fact, the meeting has strongly felt that the TCP intervention had benefited only the middleman and not the farmers, and caused financial losses to the government," said the sources.

It is estimated that the TCP may suffer a total loss of around Rs5 billion if it lifts one million bales from the ginneries as has been committed by it. The ginneries have so far delivered the TCP 350,000 bales.

The sources didn't say as to what kind of report the committee would present to the ECC at its next meeting. "All I can tell you at present is that the ministers have agreed to send detailed report to the ECC," a participant said.

When contacted, All Pakistan Textile Mills Association (Aptma) chairman Arif Saeed told Dawn that the spinners had demanded that the government should devise some kind of mechanism to "directly" support the growers as the "middleman was keeping the profits (or indirect subsidy)".

"We've from day one calling for direct subsidy for the farmers. The TCP intervention is not helping them," he said. "Besides, the Aptma has also been demanding the TCP should not export cotton procured by it because it will only benefit our competitors. What is the fun in suffering financial loss to help our competitors?"

Aptma had raised these points at the meeting. The TCP is already reported to have suffered losses on account of export of 10,000 bales at an f.o.b price of slightly less than $0.42. "If the corporation has to issue international tenders at all, we (local spinners) should also be allowed to participate in it," Mr Saeed said.

He said the cotton prices were already under a strain owing to an estimated record world crop of 111 million bales this year. In addition, textile exports are also said to be under strain due to the abolition of quota regime from Jan 1, 2005.

"(Foreign) buyers are already asking for a 15 per cent discount on garments in view of the abolition of the quotas," he said. "In this scenario, this is impossible for the spinners to pay a higher than international cotton price. But we do not want the farmers to suffer due to it.

They should be given direct subsidy. The existing mechanism isn't helping them at all. At the same time, we want the government not to sell cotton procured by the TCP to the foreign spinners at the expense of the local industry," Mr Saeed said.

NADEEM SAEED ADDS FROM MULTAN: The federal government has formed a four-member committee to decide whether the cotton being procured by the Trading Corporation of Pakistan this year should be exported or maintained as a buffer stock.