APTMA resents potential entry of TCP in cotton buying
15 December, 2011
KARACHI: The government is trying to feed handful of legislature by asking Trading Corporation of Pakistan (TCP) to lift cotton as second player.
This will enhance cost of production of textile exports in the country besides the textile sector will face a Herculean task to compete in the international market, All Pakistan Textile Mills Association (APTMA) said on Wednesday.
Yasin Siddik of APTMA said the latest report in international market has endorsed the APTMA concerns regarding sluggish economic trends, particularly rising trade deficit amidst dwindling exports. The higher cost of cotton in the country will hit the textile sector value addition activity, he added.
The government should direct the TCP to start buying cotton from growers at the rates prescribed by the government, members National Assembly Standing Committee said. The committee recommended the government should also take up the issue of cotton purchase by the TCP in its cabinet meeting on Dec 14.
The textile exports though increased in value terms during last four months of current fiscal, yet all textile exports declined in quantity terms in November. APTMA members are still facing short supply of energy, which was one of the prime reasons behind drop in exports, as the textile industry has been denied gas supply for 120 days during 2011 against much lesser days during previous year.
Advisor on Cotton Committee KCA, Shakeel Ahmad said the exports of cotton yarn, cotton cloth, knitwear, bed wear, towel and readymade garments have registered decline by 26, 32, 26, 28, 12 and 14 percent respectively in October 2011. Cotton exports would be hurt if TCP interfere in the free market as the exporters were eyeing more than 1 million bales this crop year, he added. The cotton prices would increase around 15-20 percent if TCP entered in the market, Ahmad maintained.
The government would also have to provide more than Rs 3.5 billion to TCP for the purchase rather the government should provide some relief to farmers who were deprived of billions of rupees premium amount lying with the ginners of the country, he asserted.
The textile sector faced immense liquidity crunch when the cotton prices went on record high when they touched above Rs 14,500 per maund in the country.
The textile sector, which caters around 63 percent of the total foreign exchange earning for the country cannot afford higher lint prices, he added.
Ahmad said on the other hand the IMF conditions are relevant in taking decision by the government for lifting any soft commodity including cotton through TCP. The country is heading towards a bumper crop in crop season 2011-12 to around 15 million bales.
President Zardari already said how could the government help the lint sector with more than Rs 300 billion worth subsidy besides it is running affairs on its own as an independent entity in the country. He also said the government has no additional funds to support falling prices through TCP as second buyer, the sources in the Ministry of Commerce said.