NEW COTTON POLICY
Aims at encouraging production of contamination-free cotton
By AMANULLAH BASHAR
Aug 12 - 18, 2002
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 economy.
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 below it.
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 governments.
It is envisaged under the plan to amend cotton control acts of the provincial governments for enforcement of quality cotton.
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 quality.
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.