Sep 17 - 23, 2007

Pakistan's economy revolves around cotton because it provides the basic raw material for running such a huge textile regime, which earns almost 67 percent of the total foreign exchange for the country through exports. A bumper cotton crop of 14 million bales is expected this year, which is enough to cater to the cotton need of the local industry.

On the back of its significant contribution of cotton crop to the economy, cotton deserves a special place in the scheme of things on economic map of the country.

Despite being one of the largest cotton producers in the world, Pakistan was not capitalizing the actual worth of cotton due to short staple and contamination during the process of picking and ginning of the cotton. Short staple cotton cannot be transformed into quality products such yarn of finer counts and quality fabrics.

In order to improve the agriculture products Pakistan Agriculture Research Council (PARC) has initiated a five-year Research for agriculture development program" which is expected to do something for producing cotton crop of long staple in Pakistan.

According to Chairman Pakistan Agriculture Research Council (PARC) Dr. M.E.Tasneem the agriculture scientists are expected to devise a comprehensive strategy for enhancing per acre yield of agriculture products besides improving quality of the products as well as research to produce new varieties of quality seeds.

Though the textile industry usually demand for cotton production free from contamination, the government on its part has announced incentives for producing quality cotton, yet desired results in cotton production still look a distant dream. As far as the long staple was concerned it can only be achieved through R&D efforts.

The size of the cotton crop has been assessed at 14 million bales for the current season, which is quite sufficient to cater to the textile industry in Pakistan. Actually, production of long staple cotton free from contamination is the important factors, which the textile industry is looking for with a view to capitalize the strong industrial base in of the textile sector.


Currently, international cotton prices are showing a price hike trend on the back of lower world production and declining stock to mill usage ratio.

According to the latest estimates of the International Cotton Advisory Committee (ICAC), world cotton production for 2007/08 is expected at 115million bales, almost 3% lower than 118mn bales during 2006/07.

On the other hand, world cotton consumption is projected to continue its growth pattern by depicting 2% increase at approx. 123million bales mainly due to rebound in the

International cotton trade on the back of higher Chinese imports.

It is said that consistent growth in the world consumption along with tepid production levels is resulting in declining ending stocks. The secretariat estimates 14% decline in the world ending stocks at 48million bales.

This is the situation, which provides an opportunity for Pakistan textile sector especially when the country has witnessed a bumper crop this year in the face of declining cotton production worldwide. At least the benefit of the boom like situation should also be shared with the farmers.

In fact, the supply demand situation is developing more tightening in the wake of lower world production and higher consumption which is eventually resulting in a declining stock to mill usage ratio. Following is the table indicating Cot look an index levels during the period of 2006-08.


The domestic cotton prices are also witnessing a firming trend and have reached to the level of PRs3, 100/maund (Ex-Gin price).

The major factor behind this record price level is the lower arrivals in the domestic market. Historically, the production from Singh is considered to be the initial arrivals in the market However, due to floods in the cotton sowing belt of Singh, the supply is lower than expectations. In addition to this, higher international prices also fueling the domestic price momentum. It is important to mention here that the major Textile players start their cotton procurements during the period of Oct-December, the peek period for the cotton arrival. In our opinion, with the start of Punjab's cotton arrivals in late August and onwards, the prices are expected to ease down to the level of PRs2900/maund, the same price levels that we have assumed for NML and NCL in our valuation models.


Task force on Horticulture competitiveness established to increase exports to US $ 1 billion by 2012 The government has established a Task Force for Horticulture to increase its exports to US $ one billion by 2012 in the Global horticulture market US $ 80 billions. The Task Force headed by the Advisor to the Finance and Economic Affairs Dr. Salman Shah would provide a common platform for the all stakeholders to discuss and develop a common strategy for the horticulture sector in Pakistan, Competitiveness Support Fund (CSF) sources said.

It was also decided to set up five sub committees of the Task Force to identify long term and short-term implementation plan to leverage the existing export base and improve upon it.

The sub committees include Horticulture Finance, Horticulture Infrastructure and Markets, Regulation and health certification, Processing and Canning and Production Management.

These Sub Committees, in consultation with Steering Committee under the Ministry of Food and Agriculture would formulate their recommendations within two weeks to remove hurdles and devise a strategy for improving export and domestic performance of horticulture industry of Pakistan.

Effective measures are the need of the hours to make agriculture a profitable sector of the economy. The present government is striving hard to introduce advanced technologies to enhance the yield per acre and improve the socio economic conditions of the farmers.

The farmers friendly policies introduced by the present government have however helped boosting up the agriculture and despite natural disaster experienced by the people the process of production of bumper crops is still in progress.

The problems being faced by agriculture sector is a great challenge and the government is doing hard to make it a profitable sector so that it strengthen the economy and also improve the living standard of the growers community. The growers were also required to focus their attention for cultivation of such crops which could compete in the international market and provide maximum benefits as compared to cost of production.


Despite A Bumber Crop Of 23 Million Tons-A Move To Counter Price Hike


Pakistan will be importing one million tons of wheat this year as a move to counter profitters who are creating artificial shortage of wheat just to make profit.

Prime Minister Shaukat Aziz taking serious note of the reported shortage and high prices of wheat flour directed import of one million tons of wheat to maintain a reasonable buffer stock.

Aziz has expressed concern over the artificial shortage of wheat flour and increase in price in parts of the country, despite abundant stocks following a bumper crop this year.

He said the governments of Sindh and Punjab have been directed to streamline wheat supply to operational flour mills to ensure that the commodity is available at reasonable prices in the open market.

The Prime Minister said the provincial governments have been directed to activate the price magistrates to check prices of essential items during Ramzan. They have also been asked to identify and take exemplary action against the hoarders.

The Prime Minister said directives have been issued to all border monitoring and controlling agencies to ensure that the ban on export of wheat by sea and land route is strictly enforced.

The Prime Minister said the Ministry of Interior has also been asked to strictly monitor the measures taken by various agencies to check smuggling of wheat throughout the country in close coordination with the provincial governments.

The Prime Minister said the Utility Stores Corporation has been directed to ensure availability of wheat flour at reduced prices through its 3600 outlets and to immediately deploy mobile shops in big cities to redress the reported shortage.

During the meeting that also discussed the prevailing socio-political situation in the country, the Prime Minister said PML was gearing up for the general election and said the party must stand united and take a message of good governance, transparency and improvement in the standard of living, to the people. The Prime Minister said the PML government has taken steps to transfer benefits of high economic growth to the common man, particularly those in the rural areas.

The Prime Minister said the re-election of President General Pervez Musharraf would ensure continuity and consistency of policies and progress of the country and strengthen democratic traditions.

He said government's key priority was to improve the standard of living of the people and ensure provision of basic needs including education and health facilities at the grassroots level. The steps being taken by the government to control the increase in the prices of essential commodities were no doubt appreciable and in the interest of the common man.