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An opportunity to capitalize surplus cotton through WTO

By Imran Khan
Feb 07 - 13, 2000

India never acknowledges Pakistan's existence and adopted every course of action to damage Pakistan, whether it was the act of closure of water courses in 1947 or the recent act of their own staged drama of hijacking of Indian airliner. A couple of days ago Indian government has banned import of raw cotton from Pakistan on the grounds that it contains exotic strains of destructive bacterial, viral and fungal disease which are virulent under Indian climatic conditions.

The decision of Indian government to ban import of raw cotton from Pakistan is another step towards maligning Pakistan. The B.J.P led government is trying to give their people through this act that their main stand against Pakistan is still intact. This message is directed towards the Hindu extremists people in order to regain their lost popularity and credibility after the "hi-joking" drama of Indian airliner. This may be a ploy to affect exports of cotton and cotton related products from Pakistan. Every one knows that Pakistan's exports consists of mainly cotton related products which is around 66 percent of our total export earnings. Once cotton crop is good in our country, every one is hopeful of better economic performance.

This year cotton crop in Pakistan is expected to be around 10 million mark. As of fortnight 31-12-1999, ginneries have received 8.2 million bales of cotton and it is hoped that at the current level of arrival it will be around 10 million mark by the end of the current cotton season. After taken care of higher consumption related to opening up closed textile units and higher percentage of capacity utilization in the existing units which is said to be around 9 million, it is said that we have at least 1.00 million bales available for exports.

Early this season, local prices of lint crashed due to higher arrivals into the ginneries, coupled with falling international prices of lint which was quoted around 44-45 cents per lbs, at the lower side as compared to 57-58 cents per lbs in August. However due to lower production in China and India and other technical reasons cotton prices in international markets has started picking up and is being quoted around 54 cents per lbs. for March delivery. It is hoped that these prices will continue going up in the coming months as well.

There may some people who may be worried about their fate but the silver lining in banning import of raw cotton by Indian authorities is that Pakistan can gain more by selling this left over cotton to other countries like Indonesia. Sri Lanka, Bangladesh etc., as well as another opportunity start capitalizing on it through W.T.O. etc. Here is the break-up of total additional foreign exchange which can be earned after this decision by the Indians.

Contracted Total

Price Value

Indian importers US $: 0.32/lbs. US $: 43.776 m

Current prices US $: 0.38/lbs. US $: 51.984 m

Additional foreign exchange to be earned US $: 08.208 m

After considering all these factors, we should say thank you to the Indian government because out of total 0.409 million bales of 480 lbs, our private sector exporters have contracted 3325,000 bales to India at an average price of US $ 0.32/lbs. Out of this 325,000 bales only 40,000 bales have actually been shipped to India and the remaining 285,000 bales can now be sold elsewhere at US $ 0.38/lbs. which will bring at least US$ 08.208 million additional foreign exchange to out country. This will also give another chance of local spinners to lift quality lint at reasonable prices. Another factor which will help our spinners to compete with Indian spinners that they have closed one source of quality lint. So "Thank you B.J.P and thank you very much India.