Sliding cotton prices   
By Ahmad Fraz Khan

The cotton prices need some kind of support to stabilise. With the momentum in crop arrival in the market, its price, following the international trend, has started sliding.

If the trend is not arrested, the growers will be badly hit by falling prices as well as output losses.

The cotton anatomy differs from other crops. It does not get mature to its full potential at any single stage of its cycle as wheat or rice do. Rather, it keeps yielding additional production with the passage of time from the same bolls. Precisely for this reason, market prices play crucial role in determining final yield.

If the market is on the higher side, the farmers wait till the last moment, keep picking and adding to national production. But if the rates drop, the farmers normally terminate the crop early and go for other options, especially wheat.

This makes a huge difference in the final production figures.

He said his 300-tonne edible oil and ghee manufacturing factory at Port Qasim would start production next month, adding that after six months the factory’s entire demand would be met by CPO refinery he is going to set up there.

In 1990s there was just one palm oil refinery in the country but now about a dozen are in operation.

Industry sources say one of the reasons for expanded import volumes of palm oil in the last fiscal year is that the oil and ghee industry not only caters to domestic demand but a large quantity of these items is exported to Afghanistan.

“Previously Pakistani ghee and edible oil used to be smuggled to Afghanistan through misuse of Afghanistan Transit Trade Agreement but lately tightening of the rules of ATTA has put a stop on it,” claimed an industry official.

According to Vice Chairman of Pakistan Edible Oil Refiners’ Association, Rasheed Janmohammad the import bill of palm oil can be reduced drastically by increasing the output of oilseeds and by enhancing the capacity of edible oil refineries and solvent extraction plants. Pakistan’s total requirement of edible oil is close to three million tonnes of which 75 per cent plus is imported and the rest is met domestically. Solvent extraction plants produce soft oil using seeds of sunflower, cotton and canola as well as rapeseeds and mustard etc. In the last fiscal year, total output of oilseeds was below 700,000 tonnes.

Officials of edible oil industry say after the devolution of the affairs of agriculture ministry to the provinces from this fiscal year, production of edible oil ought to go up with decentralised implementation of policies.

In addition to boosting output of traditional oilseeds there is a need to focus on using coconut plantations in Sindh and expanding the experimental plantation of olive in Balochistan and Potohar region, say edible oil industry officials.

Last year, a scientific research department of Karachi University had identified 100 local species of wild plants that can be used for extracting edible oils of different kinds. “There is a need to start experimenting on such plants and see if we can really get results,” said a senior official of Sindh’s Agriculture Department.

Agriculture scientists say that cottonseeds account for roughly 50 per cent of the domestic edible oil production followed by sunflower (30 per cent) whereas the remaining 20 per cent oil is obtained from canola, rapeseeds and mustard.

They point out that per acre yields of all these oilseed crops ranges between 15-45 per cent of potential primarily due to water scarcity and lack of the use of latest technology and farming techniques. Besides, crop losses at the time of harvesting and losses in oilseed stocks due to poor storage, preservation and processing during oil extraction also lowers the per unit output of oil extraction. Provincial governments will now have to address these and other structural issues to make the edible oil extraction industry more efficient.

In the past few years, increased income levels in rural areas has encouraged industrialists to set up solvent extraction plants to cater to the growing demand of cooking oil and ghee across the country in general and in the rural areas in particular.

“Until recently most solvent extraction plants were set up in Punjab. But industrialists now prefer to establish such plants in the industrial zone at Port Qasim and in other industrial areas of Karachi,” said a leading edible oil extractor.

“The reason is the cost of using imported oilseeds in the port city of Karachi is lower than what it could be elsewhere in the country. And it is also easier to export oilseed meals (or what is left over of oilseeds after oil extraction) from Karachi.”


Courtesy: The DAWN