KARACHI, Oct 25: The damage caused by mealy bug and leaf curl virus to the standing cotton crop in the southern Punjab and upper Sindh is estimated to cost Rs16 billion to the national exchequer.
The government has accepted that cotton crop would be short by around 1.3 million bales as revised estimates of production have been placed at 12.8 million bales from the earlier high target of 14.1 million bales. However, private estimates put the ex-farm production of cotton at 12.3 million bales because around 0.5 million bales would go to waste at the ginning stage.
The indifferent attitude and lack of timely initiatives on the part of the Ministry of Food, Agriculture and Livestock (Minfal) to deal with two diseases have been the main cause of extensive damage to the cash crop, although the diseases were traced at a very early stage.
Private surveys indicate that even today crop is suffering damage and there is hardly any move on the part of Minfal or any other department, provincial or federal, to contain it.
These reports further say that mealy bug was also causing damage to other crops, such as red chillies and corn, and if the government fails to take any pragmatic measures by using proper pesticides, final output of cotton crop may be even lesser than what is being presently estimated by the government.
Consequently, there is a panic in the textile industry owing to a rapid rise in raw cotton prices which make the industry unviable. On the other hand, yarn prices are not moving accordingly.
However, it is yet to be seen how the value-added industry faces with the current situation because ultimately this industry will have to face the music in the world market where it was already confronting with a strong competition from regional countries.
As a result of surge in cotton prices, many deceptions have cropped up which are ultimately going to create a further crisis in the cotton economy in the coming days.
The growers may have suffered badly on account of damage caused by mealy bug and leaf curl virus, but it is equally true that there is also a gain as prices of phutti (seed cotton) have soared up.
Presently, the ginners are lifting phutti from growers at a rate of around Rs1,500 to Rs1,600 per 40kg whereas official rate fixed by the government is Rs1,075. This means that the grower is earning around Rs500 to Rs600 more than the support price. However, this was causing damage to ginners who have to get bank financing at officially fixed price for phutti and not the actual price being paid by them to growers.
Similarly, the textile industry which has to pay a much higher price than the officially fixed spot rate for cotton is also getting bank financing at increased rates which has put it under a liquidity crunch.
According to market sources, raw cotton is presently being sold in the range of Rs2,900 to Rs3,100 per maund whereas spot rates are fixed at Rs2850 per maund. This deprives the industry of actual bank financing for running a unit.
As a result of these deceptions and disparities, textile industry watchers fear that in the coming days large-scale closures and bank defaults are going to echo from the largest industry of the country.
The high mark-up and cost of doing business is already making survival of the industry very difficult.
