While the textile industry was viewing the abnormal
high in cotton prices as what they called cotton crisis which they
fear may hit the export target, the optimists were looking as a
positive move as the happy growers would be producing a much better
crop next year.
The ginned cotton prices had touched a level around
Rs3,500 per maund at local market while the international cotton
prices were shot up to 82cent last week.
Although the price hike was attributed the
shortfall in the current cotton crop, yet the fact of the matter is
that the world cotton market is also facing a shortfall due to decline
in crop size in the cotton producing countries like China, India and
the United States which helped pushing up the prices.
Country like China, which is termed as one of the
large cotton exporting country, has to meet its requirement through
import of at least 4 million bales. This situation has extremely
attractive for the cotton exporters due to handsome prices being
offered. However the spinners are not happy over the situation due to
fears that more cotton may be exported out of the country and they
would be forced to import cotton at a higher prices.
The textile sector is pressurizing the government
to resolve the situation either by offering subsidies on cotton price
or allow them to import cotton from Central Asian States or from India
where the price is still low as compared to the prices in Pakistan.
Farooq Umer, Chairman, Cotton Association while
talking to PAGE did not agree to the reports that there is a
shortfall in cotton crop. He was of the view that a better return to
the growers may encourage them to harvest even a better crop next
Some of the leading textile units have expressed
their serious concern over the situation giving a threat to close down
their units if the timely steps for correction of the situation were
not taken by the authorities.
The Federation of Pakistan Chambers of Commerce and
Industry (FPCCI) has formed a seven-member committee to sort out
cotton crisis currently a talking point of the cotton and textile
trade in Pakistan.
The committee has been assigned to prepare a report
on the issue faced by the cotton and textile industry, and get the
issue resolved amicably by having meetings with the commerce and
The committee comprises Dr. Ikhtiar Baig, Abdul
Shakoor Khatri, G.R. Arshad, Iqbal Dossa, Dr. Shahzad and Iqbal Umar.
Currently, cotton textile sector is passing through
a serious crisis as the sudden increase in cotton and yarn prices in
the country has jeopardized production schedule of value added textile
sector and fulfilling export commitments.
The textile sector generally made export
commitments 6-12 months in advance and obviously the export rates are
determined on the assumption of cotton and yarn prices to be prevailed
in the country. However, the abnormal increase in cotton prices may
hit the exporters of the textile products such as ready-made garments,
towel and knitwear.
The price hit textile sector on one hand has
suggested the government not to allow export of the local cotton while
is looking into possibilities to import from Central Asian States as
well as from India where the cotton prices are still lower as compared
to local market prices.
Central Cotton Committee in its report has
projected a shortfall of 1.4 million bales.This estimate is based on
production of 8.2 million bales, against the consumption, which is
estimated at 9.6 million bales. However, the financial report about
the size of crop has yet to come. Contrary to the assessment of
shortfall in the crop, the Karachi Cotton Association was of the view
that a better per acre yield of cotton is suffice to substantiate that
the crop target of 10.05 million bales was well within the reach of
the growers and it may be hopefully achieved when the size of the crop
was finally assessed.
In the cotton policy, a tug of war between the
growers-ginners and the textile mills is a common sight in the cotton
trade of Pakistan. The textile industry always claim for a shortfall
to pressurize the government for imposition of a ban on cotton
exports, the growers on the other hand obviously have a stand for a
free hand on export of the produce to get maximum benefit of their
The world cotton faced a gap of 4.6 million bales
between production and demand. This situation is much attractive for
the growers as well as the middle in Pakistan to get benefit of the
situation. It is learnt that hiding the actual size of the crop by the
elements involved in the trade is also one of the reasons behind
pushing the cotton prices in Pakistan. Besides the domestic cotton
politics, the hike in international prices to a record high of 82
cents is also one of the major reasons for price shoot up in Pakistan.
The shortfall in world cotton production is
projected in spite of 5 percent increase in output. As against 84.45
million bales produced in 2002-03, the production in 2003-04 is
expected to rise to 92.8 million bales. The world textile sector is
likely to go up its consumption from 95.69 million bales of last year
to 97.4 million bales in the current year.