ISLAMABAD, Sept 12: The government has decided in principle to procure 100,000 tons of clean cotton this season through Trading Corporation of Pakistan (TCP) to encourage production of standardized cotton and ensure support price payments to growers, it was learnt.

The federal government would also provide a funding of Rs1.18 billion to the TCP to procure clean cotton. Moreover, losses of TCP, if any, on the sale of such cotton would also be picked up by the government, being a developmental and promotional work of national significance.

A senior government official told Dawn on Monday that a decision to this effect was taken at a recent meeting of the Economic Coordination Committee (ECC) of the Cabinet.

He said the meeting presided over by Prime Minister Shaukat Aziz was informed that contamination in cotton was a major weakness in the textile supply chain. This resulted in lower prices for Pakistan’s cotton in the Liverpool Cotton Exchange as well as related finished goods in the international market.

The meeting was told that there was need for standardization of cotton and controlling its contamination that could add substantially to Pakistan’s foreign exchange earnings.

The ministry of textile industry had proposed to procure 100,000 tons of clean cotton through provision of Rs1.18 billion by the federal government besides picking up of losses in the sale process.

The ECC approved the proposals in principle. It constituted a committee led by Minister for Textile Industry Mushtaq Cheema, who himself is a textile manufacturer and exporter, to evolve a mechanism for procurement of clean cotton by the TCP.

The committee that also comprised ministers for commerce, industries, food and the secretaries of these ministries was also directed to consult all the cotton chain stakeholders as soon as possible and submit its recommendations to the prime minister for formal approval.

Despite the fine quality of its fibre, the Pakistani raw cotton is offered lower prices in the international market owing to lack of grading and relatively high presence of non-lint contents. The loss per lb of cotton ranged up to two pound sterling in the LCE.

Former commerce and industries minister Razzak Dawood had persuaded the then chief executive Gen Pervez Musharraf in 2002 to introduce cotton standardization ordinance to ensure ginning of standardized cotton in the country. The implementation of the ordinance that required premiums for A and B category cotton, however, remained ineffective so far.

To fashion the grading system in the domestic cotton market, it is mandatory that the ginners should mark each and every bale of cotton with its grade and staple length.

The sources said that during the picking, handling and transportation, the cotton is normally contaminated with a number of things like hair, plastic etc., and are rejected in the international market.