Falling cotton prices: NA committee asks govt to intervene

Parliamentarians say TCP should procure 1m bales.

ISLAMABAD: National Assembly’s Standing Committee on Textile Industry, on Monday, unanimously recommended the government to intervene into the market to stabilise falling prices of cotton.

The parliamentarians, largely representing the growers, raised their concerns over massive decline in commodity prices. Cotton seed is being sold at Rs2,200 per 40 kg in Punjab and at Rs1,400-1,800 per 40 kg in Sindh, which has been causing losses to the growers, said Mahmood Hayat Khan of Pakistan Peoples’ Party.

Secretary Textile Industry, Shahid Rashid also said that growers had earned windfall profits when cotton prices had shot up to Rs9,000 per maund (37 kg), which was now being traded at Rs5,300 for the same amount.

The committee asked the government to give orders to Trading Corporation of Pakistan (TCP) to procure one million bales of cotton “to bring stability in the prices”. Headed by Mohamad Akram Ansari, the panel sought the government intervention within a fortnight.

Rashid further informed that the Minister for Textile, Makhdoom Shahabuddin would seek the federal cabinet’s approval, in principle, in the upcoming meeting. He said after the cabinet’s nod, a summary would be sent to the Economic Coordination Committee of the Cabinet for formally allowing the TCP to procure the commodity.

However, it was not clear whether the textile ministry would recommend procuring the cotton from farmers or from the ginning factories. The committee members desired that the TCP should purchase from growers to give better returns to them in the wake of rising input prices.

After the committee meeting, the secretary textile said that even though cotton prices had substantially decreased compared to last year, the trend was still consistent when compared with the last three years’ average prices.

Briefing the committee about world forecasts of cotton prices, an official of the textile ministry said that according to a US Department of Agriculture assessment, cotton production next year will fall, which will again push the prices up.

He said the industry will have to take the forecast seriously and ought to procure surplus cotton this year to remain immune from the price spike next year.

The standing committee also discussed the implementation status of the country’s first ever Textile Policy 2009-14 which is in its third year of enforcement. “The government has so far remained unable to fully implement the policy mainly because of finance ministry’s refusal to provide committed funds”, said Rashid.

He said the primary target of the policy was to double the rate of value from the present $1,000 per bale to $2,000 per bale over the next five years. It had been approved that the government would provide Rs200 billion over the next five years, to achieve the objective.

Published in The Express Tribune, December 13^th, 2011.