* TCP entry will dent textile sector, enhance cost of production
* President politely refuses PCGA request
By Razi Syed
KARACHI: Intervention by Trading Corporation of Pakistan (TCP) to lift cotton as second player will enhance cost of production of textile exports in the country.
A tug of war has started between All Pakistan Textile Mills Association (APTMA) and Pakistan Cotton Ginners Association (PCGA) on issue of TCP entry in the cotton buying.
The entry of TCP will enhance the production cost of textile made ups and cloths in the international market, said members APTMA and Karachi Cotton Association (KCA).
Mohsin Aziz chairman APTMA said the International Monetary Fund (IMF) latest report has also endorsed the APTMA concerns regarding sluggish economic trends, particularly rising trade deficit amidst dwindling exports. In case of higher cost of cotton in the country, the textile sector will face a Herculean task to compete in the international market, he added.
The textile exports though increased in value terms during last four months of current fiscal, yet all textile exports declined in quantity terms in October.
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.
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.
He said there are reports government would keep trading open and would probably not involve in providing support to cotton and other agriculture sectors.
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 14.8 million bales. Sources in the Ministries of Finance and Textile Ministry also confirmed the government would not involve in free market mechanism.
During a Video Conference with the members of the PCGA, President Asif Ali Zardari asked them to revive their market strategies and common goals to benefit textile sector of the country.
Zardari said how can 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 added.
President Asif Ali Zardari turned down the request of PCGA for calling TCP to intervene as second player to support cotton prices in the country.
Amanullah Quraishi Chairman PCGA warned the government, “If TCP will not start buying cottonseed from ginners by December 10, 2011 the ginning sector would stop buying cottonseed besides shut down ginning activities in the country.” He demanded the government to announce support price like wheat in order to safeguard the interests of ginners and growers.