MULTAN, Nov 26: The commerce ministry has constituted a five-member task force on cotton with the TCP chairman as its head to envisage a long-term strategy for price stabilization of the commodity.
The other members of the task force are the All-Pakistan Textile Mills Association chairman, the Pakistan Cotton Ginners Association chairman, a representative from the Karachi Cotton Association and growers' representative Khwaja Mohammad Shoaib.
Primarily, a four-member committee was formed at a meeting of the inter-ministerial committee on cotton held on Nov 23 last to decide whether the cotton being procured by the TCP should be exported or maintained as a buffer stock.
However, the status of the committee has now been exalted to the task force, and the KCA has also been given representation along with millers, ginners and growers. Simultaneously, the scope of the task force objectives has also been broadened to evolve a policy for price stabilization in the cotton market to provide a level-playing field to all stakeholders both in case of surplus and short crop.
The other objectives of the task force are to formulate views to create and maintain the buffer stock, decide the fate of the cotton delivered to the TCP so far by the ginners and also work out TCP's profit and loss statement about its cotton transactions.
The TCP role has come under criticism by certain quarters as the public sector intervention to ensure the growers the minimum fixed phutti price of Rs925 per 40kg. Millers are opposed to the public sector role in the cotton market as it deprives them of the leverage to manipulate prices as almost the only buyer of the domestic cotton.
The growers have been complaining that the real beneficiary of the TCP intervention are ginners because they are not passing on the fruit of price differential between the procurement price of the trading corporation and the prices prevailing in the open market.
The corporation has so far procured some 400,000 bales of cotton, while agreements for as many bales have been struck between the corporation and the ginners. Analysts say the TCP's role in the market has come under fire since it had exported in haste some 10,000 bales at a price of five cents less than its procurement and handling cost of 47 cents per pound.
They say the move was ill-advised because the export tenders were called when the cotton price in the international market was low. But undoubtedly an intervention by the TCP has upheld the phutti price in the proximity of the minimum fixed price of Rs925 per 40kg. "Otherwise there was a possibility that the market manipulators might have crashed the prices in the wake of healthy world and local cotton production this season."