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Issues & Analysis
Major cotton marketing crisis
may hit Sindh
HYDERABAD: As a 1999-like major cotton crisis is feared to hit
the province of Sindh this year, the provincial government is
likely to ask Centre to stop cotton import forthwith so that
local cotton growers may get suitable prices for their
produce. According to sources, the Sindh government is also
considering to ask the Centre to make requisite arrangements
for cotton procurement from the growers.
According to relevant circles, early cotton crop has started
arriving in the markets in lower Sindh areas like Tando
Allahyar, Digri, Tando Bago and Badin. Initially, the cotton
crop -- which has been in these market for two to three weeks
-- was sold for Rs 750 per 40 kg, but the prices came down to
Rs 700 per the same mass in just a week. Growers fear if more
lower Sindh crop keeps arriving in the market, the prices may
touch the level of Rs 400 per 40 kg, causing them a severe
financial setback. It may be mentioned here that the Sindh
cotton last year was sold for Rs 1,000 to 1,100 per 40 kg.
According to the relevant circles, the factors causing the
sale of early cotton at low prices are:
1) Unhindered import of cotton from abroad. As per the
growers' claim, about one lakh bales of cotton had been
imported a week back while LCs for further import had been
opened. As far as the stoppage of import of cotton and its
procurement are concerned, senior officials of Sindh
government are optimistic about a positive response from the
Centre. However, some provincial government circles are not
too hopeful in this regard. As a reason, these circles point
to the DTO provisions as well as the conditions laid down by
international donors that there should be no control on the
import or export of any agricultural commodity and that the
procurement of agricultural commodities be discouraged.
2) Ginners are said to hold carry-over Phutti stocks of two
lakh bales.
3) Almost all the cotton-growing countries of the world have
had a bumper crop this year. The US, in particular, produced
about 18 million bales.
4) With the exception of one or two, no ginning factories of
Sindh has started ginning Phutti. As a result, the lower Sindh
cotton, arriving in the market, is being dispatched to Punjab
whose middlemen are making purchases at cheaper rates. In this
regard, some circles are of the view that Sindh government has
not fixed ginning fee for ginning factories -- a chief
condition for the operation of ginning factories.
Meanwhile, the Sindh government circles do not see weight in
claims of paltry cotton production this year. These circles
say that production cannot be assessed at this stage. Talking
to The News, senior office-bearers of Sindh Abadgar Board
expressed deep concern over the sale of Sindh cotton at low
prices. They said that it would be the second time in three
years that the cotton growers of Sindh would have to face a
severe financial crisis. They regretted that the federal
government was so far ignorant of the brewing of a major
crisis in Sindh. They might wake up when this crisis was
shifted to Punjab, they said.
Courtesy The News July
23, 2001
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