KARACHI, Dec 5: Sindh ginners have urged the government to set up an arbitration tribunal to settle trade disputes arising out of wide fluctuations in prices of lint cotton.
“The history of cotton trade abounds with examples when both the ginners and spinners have failed to honour their contractual obligations whenever there is an abnormal price rise or fall,” said a leading ginner.
An arbitration panel strictly adhering to normal business and trade ethics and commercial guidelines is now a must as refusal by spinners and leading textile mills not to honour their commitments have caused losses of millions of rupees to both the growers and ginners whenever the crop is uncertain.
Spinners complain that ginners also default whenever there is wide fluctuations in prices and do not deliver cotton bales according to terms of purchase agreements.
“The arbitration panel on cotton should have the power to punish financially the erring party whether it is a ginner or spinner,” ginners demand.
Citing examples of the recent failures on the part of spinners, a leading ginner and vice-chairman of Pakistan Cotton Ginners’ Association from Naushehro Feroz, Seth Jetha Nand said that to exploit ginners and growers, the textile mill owners had set up a pool to buy cotton on their terms.
He said the modus operandi of the pool members was to only buy cotton at lower rates which inflicted heavy losses to the ginners and growers. Nand alleged they even do not honour their written purchase contracts if the market falls and delay lifting of cotton.
The pool members also delay in making payments against cotton delivered, though they are supposed to make payments at arrival at mills. In some cases the payments have been delayed up to six months, he added.
Jetha Nand lamented that when payments are made against cheques, they mostly bounce and that creates liquidity problem for the ginners and growers.
He suggested that some government or semi-government body in the form of arbitration panel or tribunal should be established to address such problems.