MULTAN, Feb 11: Prices of phutti (seed cotton) have dropped to Rs550 per 40 kg in various parts of the cotton belt of the Punjab owing to the sluggish market and buyers’ manipulations.

According to reports from the cotton growing areas, the phutti prices are varying from Rs550 to 700 per 40 kg, depending on the quality of the produce.

The stocks from the first pick are fetching a price from Rs650 to 700 per 40 kg and the second pick stocks are being offered a price from Rs550 to 650.

The federal government had fixed the minimum price of phutti at Rs780 per 40 kg. It was announced that in case the prices fall below the minimum, the government would activate the Trading Corporation of Pakistan (TCP) as the alternative buyer in the market to maintain a certain level of phutti price through the public sector intervention.

The corporation was provided with a credit line of Rs10 billion by the State Bank of Pakistan (SBP) for the task of price stabilization in the otherwise single-buyer-dominated cotton market.

The phutti prices were around Rs600 per 40 kg in the Punjab and Sindh when the 2001-2002 season began, mainly because of the forecasts of a bumper crop and the global recession after the Sept 11 terrorist attacks in the US.

The prices stabilized by mid-November after the realization that the crop would be of a moderate size and Pakistan government decision to join the international coalition against terrorism. The prices went up from Rs850 to 970 per 40 kg. But after a month’s brisk buying, spinners opted to slow down procurement of lint. “By that time the spinners had stocked enough cotton besides importing more than the required quantity of the lint to dictate terms in the market,” an analyst observed.

A leading progressive grower of the country, Saddiq Akbar Bokhari, said only 30 to 35 per cent cotton of the Punjab, sold during Nov 5 to Dec 15 could fetch a reasonable price when the lint prices were ranging from Rs1,950 to 2,150 per 40kg.

At present, some 2 million bales of cotton are lying unsold with the ginners across the country. Because of disinterested buyers, the lint prices have come to as low as Rs1,400 to 1,600 per 40kg in various parts of the cotton growing areas of the country. Pakistan Cotton Ginners Association chairman Sheikh Muhammad Saeed lamented that the spinners were using the ginneries as their warehouses. He said that ginners were incurring huge financial losses in the face of not clearing their bank dues. Furthermore, the ginners had slowed down procurement of phutti to avoid piling up of stocks in their factories.

A sizable quantity of phutti is likely to be destroyed because it is lying in the fields, he apprehended.

By the end of January 2002, the TCP had procured only 118,000 cotton bales against its mandate of 1 million bales. The market circumstances then and now have been suggesting an effective role of the corporation to stabilize cotton prices.

The TCP authorities are not paying heed to the situation which has aggravated the woes of farming community. During the last season, the produce was sold on a price ranging from Rs200 to 240 per 40 kg against the official support price of Rs300.

Meanwhile, the Pakistan Cotton Ginners Association has welcomed President Gen Pervez Musharraf’s order to the TCP for the purchase of one million bales of cotton immediately.

Association sources said here on Monday that President Musharraf directed TCP Chairman Masood Alam Rizvi in this regard.

Sources said that PCGA chairman Sheikh Muhammad Saeed conveyed the news to the association office here from the USA. Mr Saeed is a member of the ginning delegation studying modern ginning techniques in vogue in the United States.

The PCGA has also paid his deep gratitude to Federal Commerce Minister Abdur Razzak Dawood for his support to the ginners-growers’ demand for the purchase of one million bales of cotton by the TCP.

Mr Saeed has asked the ginners to contact the TCP for reaching agreements for the sale of lint. He told ginners that the TCP has been directed to buy grade III lint at the official rate till it achieves its one million bales target.

The Farmers Associates Pakistan (FAP) has also welcomed the directive of President Musharraf to the TCP to implement the decision to purchase one million bales of cotton in letter and spirit.

The TCP had suspended the procurement after purchasing 124,000 bales because of price escalation in the market.

An FAP spokesman said that the resumption of procurement would help stabilize the prices of the cotton lint which had lately dipped.