While textile industry asks for a shot in the arm to perform, cotton farmers demand their ‘due’ share in dividends
PakistanΆs textiles industry that has 55 per cent share in the total exports of the country and 8 per cent share in its Gross Domestic Product (GDP) seems to be in deep waters nowadays. Over the last few months, it has talked a lot about the challenges it is facing and demanded the government announce remedial measures.
In a series of events, the industry has also intensified its lobbying and raised its issues at different forums. For example, a couple of days ago, a team of the All Pakistan Textile Mills Association (APTMA) appeared before the Senate Standing Committee on Textile Industry and presented its case. The association also announced a nationwide strike but deferred it after getting certain assurances from the government.
The APTMA team visiting the Senate raised special concerns about the expected government decision to purchase one million bales of seed cotton (phutti) from the market at a rate of Rs3000 per 40 kg through the Trading Corporation of Pakistan (TCP). It expressed fears that the intervention of TCP would disturb the demand-supply mechanism in the open market and lead to speculation and artificial increase in domestic cotton prices.
It suspected the TCP would pick these bales from around 14 million bales available in the market, most probably without ensuring its quality and to oblige selected farmers. The chances of other irregularities by the TCP officials during this procurement exercise are also high, it fears.
The farmersΆ community on the other hand is celebrating this expected announcement with a hope that the number of bales to be purchased by the TCP will be increased later on. Their point is that farmers shall be compensated this year as they have suffered huge losses. They attributed these losses mainly to the increasing input costs, fall in cotton prices in the global market and damage to the local cotton crop due to inclement weather this year.
The other issues of the textile industry include the pending release of outstanding refunds to the tune of Rs100 billion to textile exporters by the Federal Board of Revenue (FBR), the ever-rising input costs, unfavourable utility tariffs structure, high cost of doing business in Pakistan and its exports being uncompetitive in the international market.
Anis-ul-Haq, Secretary APTMA, tells TNS that the association strongly believes the farmers shall get due price for their produce but not at the cost of the industry and the national exchequer. He says if the TCP buys one million bales, the market sentiment will change and prices will soar. The textile industry which is already 15 per cent ineffective will come under further pressure, he adds. Besides, he says, the textile industry is selling cotton yarn in the market just to show its presence in the global market.
Haq adds they have suggested to the government to give direct subsidy to farmers and relief in taxes on agricultural inputs. This way, he says, farmers will get a good return on their investment without distorting the cotton prices in the local market. It is quite likely the government will go for direct subsidies and scrap the idea of purchase through the TCP.
Haq says the TCP bought 100,000 cotton bales in the past which are still lying in go-downs and nobody is ready to buy them due to the poor quality of this cotton. “I fear it would be a repeat of this if the TCP enters the arena.” Besides, he says, the industry is cash-strapped due to the non-release of export refunds by the FBR. The board has been asked to release a part of this amount without delay. If this happens the textile industry will get a new lease of life, he adds.