Cotton crop that provides a strong base for the economy of Pakistan
continues to remain in the news because of clash of interests of the
different segments of the stakeholders especially in the textile
Despite acute shortage of water, which is source of
life for the agricultural activities, the farming sector is doing a
wonderful job by producing the cotton crop matching to the current needs
of the local industry. However, like every large sector, the cotton
industry also facing with problems and challenging targets such as
meeting the local requirement, pricing interests, involvement of the
government quarters in the cotton market and also to produce
contamination-free cotton to meet the demand of the international buyers
for quality products.
In order to address all these problems a new cotton
policy is on the anvil and is likely to be announced shortly. Whatever
the reasons may be the area for cotton cultivation has been reduced for
the next season, may be because of shortage of water or other factors
diminishing the interest of the growers.
Due to reduced area under cultivation it is feared
that Pakistan may have to import raw cotton this year due to 8.9 per
cent fall in cotton sowing area this year as compared to 2001-2.
The latest figures received by the ministry of food
and agriculture and livestock from the provinces indicated that the
total area brought under cotton cultivation was 26,35,100 hectares as
against 28,93,000 hectares dedicated to cotton crop in 2001-02.
The market has already responded to the likely
shortfall in availability of cotton as evident from the current rates of
phutti. Whereas its price had not been allowed to rise above Rs750 per
40 kg last year, this year the prices range between Rs915 to Rs925.
The low prices paid to farmers coupled with late
availability of irrigation water contributed to a steep 11 per cent drop
in cotton area in Punjab (around 84 per cent of the total area of
Pakistan brought under the cash crop).
The government has fixed the minimum price of phutti
at Rs800 per 40 kg and designated the Trading Corporation of Pakistan,
the second buyer, to purchase phutti in the event of its prices dropping
No decision had been taken as yet about imposing any
such levy. Any such measure would be part of a broad-based cotton policy
that would address all the relevant issues.
The government is however about to announce a long
term package of the policies to rid the cotton affairs of various
weaknesses, to identify the gaps still persisting in cotton production,
processing and trading and remove these.
In this connection, the ministry of food and
agriculture has already held meetings with representatives of provincial
It is envisaged under the plan to amend cotton
control acts of the provincial governments for enforcement of quality
At present the contamination of lint ranged between
18 to 19 grams per cotton bale. Last year, ministry of food and
agriculture conducted a successful experiment in Rahim Yar Khan and as a
result, the contamination was reduced to 5 grams.
Under the experiment, the incentives were given to
farmers in the shape of additional payment of Rs220 per 40 kg of lint
for zero contamination. The farmers who reduced it to 2.5 per cent were
paid Rs70 per 40 kg in addition to the normal rate.
The international standard however required that
contamination be limited to 2.5 grams per bale.
Another objective of the proposed new cotton policy
would be to reduce the moisture content in cotton from the present 12-13
per cent to 8.9 per cent.
The new policy would also review the system of
Research and Development relating to cotton in the country and consider
means to improve it for raising productivity of cotton, improving its
A package enfolding a number of lucrative incentives
for cotton sector is to be announced in the new cotton policy due any
time in the current month.
The new policy is believed to ensure TCP's role as a
second buyer in the market as TCPís present in the market would keep
cotton prices at an optimum level, besides ensuring good price of the
produce for growers.
As per policy decision, the TCP would stay in the
market and ensure that crop prices are not below fixed prices.
The government has also announced Rs800 per 40 kg as
indicative price of raw cotton for 2002-2003. However, this price is
being considered low in the wake of good prospects for new crop to fetch
better rates in the international markets. The policy would address the
issue of credit availability to the stakeholders at concessional rate.
It would ask the commercial banks to provide loans to the stakeholders
of cotton sector at 14 per cent interest.
In order to achieve the target of zero-rated
contaminated cotton the government is going to have a new premium
formula based on three slabs. Lower contamination would get higher
premium. Below 2 per cent contamination ratio would be considered as the
best quality lint and its producer would get Rs250 per 40 kg as premium.