What is the rationale behind selling a valued-added product to a foreign buyer at a much lower rate than to the local producer of the same end-products is difficult to understand as in the final analysis it will work against our own competitiveness in the export field.

Incidentally, the commodity in question here is lint cotton, which contributes over 60 per cent to the total national annual exports of roughly about $6 billion.

Spinners question the role of the Trading Corporation of Pakistan (TCP) as a protector of interest of the entire cotton trade notably of the growers.

Its designed role is to support the market after prices of phutti or lint cotton fall below the officially fixed procurement prices.

It is allowed to sell the procured lint to foreign buyers through international tenders without fixation of minimum export price.

After evaluating the bid prices from the foreign buyers, it accepts the highest bid irrespective of the fact whether or not it is in line with the local prevailing prices.

Local spinners are not allowed to take part in these international tenders for reasons known to the officials alone but they are allowed to import, under the free market economy policy, to spend million of dollars on the import of the same lint at much cheaper rates.

Last season spinners imported about 0.8 million bales despite the fact that surplus stocks were lying unsold both with the ginners and the TCP and were carried over to the new season.

The TCP sources claim their basic role is to provide a level field for all the major players, growers, ginners, spinners and to a lesser extent exporters engaged in the cotton trade, of course, after creating conditions conducive to healthy competition among them to protect their respective interests.

But spinners question the logic of squandering away the huge amounts of foreign exchange on the import of lint cotton when the commodity is locally available at a competitive rates before the entry of the TCP in the market as a second buyer.

“The TCP should enter the market if there is enough exportable surplus of lint cotton after meeting the local demand, “spinners say adding, “if it resumes new season buying along with the spinners then there are chances of price manipulation by any of the parties in trade”.

Late Dr Mahbubul Haq, former finance minister and a leading economist used to say “the basic function of the government is to provide health care and education to the common man and if it has time or more money to spend it could opt for trading”.

“Spinners import the same quantity of lint from various sources to match the combined total of the TCP and the private sector at much cheaper rates to fill in the possible supply gaps if any owing to an uncertain cotton crop”, cotton analysts say and ask “what is the gain in the whole exercise.

The entire operation is carried out to please the grower and the ginner with out giving due thought what it will mean to the export sector”.

“While the country needs any amount of dollars to reinforce its reserve base through indigenous resources, lavish spending is allowed on the import of the commodity freely available on the local market”, spinners say.

Where is the rationale to sell lint to foreign buyers around Rs1,700 per maund after procuring it at Rs1,855 per maund plus carrying charges and other overhead, they ask.

Why not the TCP is directed to keep a buffer stock of half a million bales of lint cotton after banning imports and supply it to the local spinners at the end of the season after adding overheads and profit on investment to the needy spinners and then export if anything is left out of its seasonal tally.

That will ensure not only adequate supplies of lint to the mills and spinners till the end of the season but also facilitate smooth sailing on the export front, making end-products more competitive.

Textile trade is still in recession the world over. But local exports become non-competitive if lint is sold to foreign competitors at cheaper rates. That is where a judicious balance need to be kept between the local industry exports to the foreign outlets.

During the current season, lint cotton has touched the lowest at Rs1,525 and the highest at Rs2,250, showing a wide difference of Rs700 between the two extreme ends.

There was no price manipulation by any quarter in the trade but market forces were at work dictated by the conflicting rumours about the size of the crop followed by reports of extensive damage to standing crop in the southern Punjab cotton belt.

Many may well, therefore, question the rationale behind the market operations of the TCP.

Why not the TCP follow the guidelines given to its Indian counterpart, which keeps a sizeable buffer stock of lint cotton to meet any eventuality and floats international sale tenders after ensuring the annual supplies for the local industry.

The role of the TCP as a market stabilzer is welcome but it should not go beyond the normal marketing practices on the strength of an enormous funds at its disposal.

Its role should be supplementary to the textile industry rather than a competitor, spinners complain.