KCA opposes government intervention into cotton trade

By AMANULLAH BASHAR
Feb 28 - Mar 05, 2000

The Karachi Cotton Association (KCA) has strongly opposed the intervention by the public sector into cotton or other commodity trade in Pakistan.

The KCA's board of directors which met here on Thursday Feb 24, 2000 expressed concern over increasing involvement of the public sector into cotton trade which the board call against the principle of free market economy.

Maqbool Sadiq, Chairman of KCA while commenting on the report that the government intended to purchase the entire cotton crop next year told PAGE neither it is feasible for any government to lift the entire crop nor it has enough funds to invest into a single commodity at such a massive scale. He said that KCA has always opposed the intervention of the public sector into commodity and the experience has also proved the KCA's stand. He suggested that government's role into commodity trade should be of monitoring nature instead of involving into it. Even in the controlled economies the experience has been proved a flop. By doing so, instead of gaining anything out of it, we may be pushing the wheel of the economy into reverse direction, he remarked. Let the market forces prevail in major crops like cotton, rice or others so the economy could find its natural way of growth, he observed.

It may be recalled that the Chief Executive, General Pervez Musharraf had said that the new cotton policy would be declared in March and the Trading Corporation of Pakistan (TCP) would procure the entire cotton crop from the growers from next year so that farmers could get fair return of their produce.

He further said that the government has also decided to share the profit to be earned by TCP in cotton deals and exports with the farmers. A feasible procedure would be adopted for its return to the cotton growers. The micro-credit bank which is being established to provide small loans on soft terms and conditions to the farmers and cottage industry would bring a revolution in country development, he said.

Production

Meanwhile there are strong signals that the cotton crop during the current season may well surpass the figure of 10 million bales reflected in the sustained flow of phutti from fields into ginneries during the last fortnight.

The first six months' production of current season has already reached the mark of 9.492 million bales as compared to 7.009 million bales achieved in corresponding period of last year.

Figures released by Pakistan Cotton Ginners Association indicate that 90,333 bales reached ginneries during Feb 1 to 15. This helped to sustained higher harvest figures of 35.43 per cent over last year.

There should remain no doubt that cotton output this season will by all means exceed 10 million bales and on adding 1.8 million bales carried-over stock from last year, the country will have much more than its domestic requirement.

As a sizable number of closed and idle spinning units have come into production the domestic consumption of raw cotton is likely to increase from 8.5 million bales this year.

On the consumption side, textile mills continue to have lion's share by purchasing 7.526 million bales compared to 5.607 million bales recorded in the same period last year.

The private exporters lifted 0.192 million bales and TCP has made little improvement over its last figures at 0.516 million bales.

At present the ginners are holding 1.069 million bales of unsold stocks compared to 1.237 million bales they had in the last season.

Policy

The government is intended to announce a new cotton policy in the middle of next March which is supposed to give a clear direction to all segments of the cotton trade. Although the government announcement to procure the entire cotton crop next year has stirred the cotton trade, yet it is believed that it was aimed at consoling the growers who had to suffer a lot due to policies of the previous government. In a way consolation to the farmers on the part of the government was of vital importance to ensure a better crop next year because there were talks that the farmers were thinking to switch over to some other crops instead of harvesting cotton crop due to financial crisis they faced last year on account of uncalled for import of 1.8 million bales into Pakistan.

According to informed sources, a special body is being constituted to ensure timely purchase of cotton crop so that the growers could get proper return of their produce.

A relief package for the farmers is also expected to be announced in the cotton policy enabling them to enhance per acre yield of cotton and other major crops.

Meanwhile modalities are also being finalised by the government to pass on the profit of cotton to the growers purchased by the public sector through Trading Corporation of Pakistan.

The finance ministry is already working out a system for this purpose.

The present government however has a valid point that it was not responsible for the existing cotton crisis because the previous regime had imported 1.8 million bales in spite of observing good cotton produce at home. Resultantly, cotton growers could not get a fair return of their produce in Pakistan. The new policy is likely to protect the interest of the growers which include a good return to the farmers.