ISLAMABAD: The government is finalising incentives for cotton growers that may include an indicative cotton price of more than Rs3,800 per 40 kg to encourage farmers to use quality inputs to enhance output this season.
PM’s Adviser on Finance and Revenue Dr Abdul Hafeez Shaikh on Thursday presided over a meeting of stakeholders including cotton growers, Kissan Ittehad, textile millers and ginners besides the relevant government entities to consider various options and incentives.
Informed sources said the Ministry of National Food Security and Research (MNFSR) had proposed an indicative price of Rs4,000 per 40 kg. The meeting was informed that relevant authorities were expecting at least two million additional bales of cotton production this year when compared to last year.
It was argued that a helping hand from the government could further boost this additional output as farmers would be encouraged and better placed to invest in quality inputs, particularly fertiliser and pesticides etc. The core objective of the meeting was to take all possible measures that help farmers get better price this season to secure even better output next year.
There was still an ongoing debate on the indicative price because it involved about Rs80-100 billion financial impact. The finance ministry is in a tight position given PM Imran Khan’s clear instructions that he wanted to uplift the farmer community to enhance output and the prevailing financial conditions of the government particularly at the beginning of the International Monetary Fund programme.
A participant said it was explained that domestic cotton price was around Rs3,500-3,600 per 40 kg compared to about Rs4,400 per 40kg imported price and the MNFSR wanted a middle ground as offering indicative price for local farmers this season. There was also a suggestion that the provinces should also be persuaded to bear at least a part of the financial burden to support cotton farmers.
A view also came from the textile sector that import price had now come down and an intervention price would artificially jack up local prices and negatively affect international competitiveness.
At the same time, ginners would also have to be offered some incentives including through lower energy prices so that they pick up the commodity at indicative prices to reduce financial burden on the public sector. The government will have to activate Trading Corporation of Pakistan to ensure better prices for cotton.
The consultations would also be joined by Syed Fakhar Imam, MNA, the chairman of PM’s task force on agriculture and Speaker National Assembly Asad Qaiser to finalise a way forward also keeping in mind the PM’s programme for enhancement of cotton crop output.
The meeting was informed that cotton crop had been on the decline over the past few years owing to lack of attention and support from the government over past few years. The crop output fell from 14m bales to just 10.8m bales last year and textile industry’s requirement of about 15m bales.
Resultantly, the textile industry had to bank on imported commodity at a foreign exchange cost of more than $1bn last year. The cotton output target for current year is set at 15m bales that may not be achieved unless farmers were offered good returns.
Shaikh told the participants that government was extending unprecedented focus on the growth of agriculture sector which does not merely look at agriculture as providing the main pivot to the growth of economy but also allocating vast sums for its further growth. “Only last week, the government approved projects worth Rs250bn for the uplift of agriculture sector with focus on enhancing crop productivity and improving the means and resources for better farming,” he said.
Adviser to the Prime Minister on Commerce, Textile, Industry and Production and Investment Abdul Razak Dawood, Minister for National Food Security and Research Sahibzada Muhammad Mehboob Sultan, Federal Board of Revenue (FBR) Chairman Shabbar Zaidi and senior officials of Finance Division were also present.
Shaikh said the government was fully aware of the cotton growers’ difficulties in getting better prices which not only offset their cost of production but also provide them with incentives to use more inputs and increase the crop area for enhanced productivity. “The government is actively considering various options and hopefully we have an arrangement which addresses the concerns of cotton growers and helps them fetch good prices for their produce,” he was quoted as saying in an official statement.
He also asked the textile industry, ginners’ association and other stakeholders to sit with the FBR officials and Commerce Ministry to discuss their issues and finalise realistic proposals within the next few days to help government take a decision that could address the concerns of all stakeholders particularly the cotton growers in getting better prices in the upcoming season.
Published in Dawn, September 6th, 2019