Karachi Cotton Association expresses serious concern over reports of inducting TCP in the market to procure Lint Cotton from the ginneries at support price

Karachi, July 15, 2016 (PPI-OT): The Karachi Cotton Association has expressed its serious concern on the reports appearing in the section of Press on 12-07-2016 that the Government is considering to induct the Trading Corporation of Pakistan (TCP) in the market to procure Lint Cotton from the ginneries at support price with a view to extend benefit to cotton growers.

The KCA is of the view that any intervention by the Government/Public Sector Organization would not only create distortions in the cotton market but also place adverse repercussion on exports of cotton and its allied products. This would also negate the policy of free trading in cotton being followed very successfully since over a decade which safeguard the interest of all the stakeholders of the cotton economy including the cotton growers.

The KCA believes that sustainable future of all stakeholders of cotton economy depends upon the continuation of a non intervention policy of the Government in the cotton trade so as to safeguard the interest of cotton growers as well and ensure them fair price for their produce over the long run. Under the demand and supply mechanism, the market forces themselves determine the price level of the commodity.

It may be recalled that in the past, the Government through TCP intervened in the cotton market to procure raw cotton from the ginneries at higher than market price but the desired benefit could not be passed on to the cotton growers.

The KCA is of the view that an efficient and effective way to compensate the cotton growers in adverse conditions would be to provide direct subsidy to them by subsidizing electricity, fertilizer and pesticides to reduce their cost of production. This would not only ensure direct benefit to the cotton growers without any middlemen or malpractice but also help to lessen losses to the Government as was the case in the past. Many of these incentives have been covered through Kissan Package and further through the Budget of 2016-17.

The KCA, therefore, strongly urges upon the Government not to make any intervention in the cotton market through Public Sector Organization and continue with the free trading policy of cotton to safeguard the interest of all stakeholders of cotton economy and keep all of them competitive as otherwise, the intervention of the TCP in the cotton market would create unnatural shortage of quality cotton, inflate prices of cotton unnecessarily, render the textile and down-stream industry uncompetitive, accelerate the decline of cotton exports, cause industry closure/unemployment and incur losses of billion of Rupees to the exchequer.

Further, the KCA urges upon the Government to withdraw 4% Customs Duty on import of cotton. This will help the local textile mills to meet their balance requirement of raw material from abroad in the backdrop of shortage of cotton crop at home and make their business competitive in the international market to earn valuable foreign exchange for the country through exports of value added products of cotton.

For more information, contact:
Karachi Cotton Association
The Cotton Exchange I.I Chundrigar Road,
Karachi, Pakistan.
Phone: + (92)242-5007, + (92)241-2570, + (92)241-6497
Fax: + (92)241-3035, + (92)241-2580
Email: contact@kcapak.org