The Trading Corporation of Pakistan (TCP) has decided to buy one million bales of cotton following a drop in open market rates.
TCP is seeking bids from various stakeholders, including cotton procurement agents, firms, and labor contractors, a move that will likely reverse the downward trend in cotton prices.
Cotton Ginners Forum Chairman Ihsanul Haq stated that in light of directives from Prime Minister Shehbaz Sharif, the federal government had initially set the intervention price of cotton at Rs. 8,500 per 40 kg this year.
However, the removal of subsidized rates for electricity and gas supply to textile mills, coupled with increased production costs and pressure from the International Monetary Fund (IMF), led to an unexpected decline in cotton purchases by textile mills. Consequently, cotton prices saw a dip from Rs. 9,500 to a range between Rs. 7,500 and Rs. 8,000 per 40 kg.
Responding to the plea from growers and protests against this backdrop, the TCP recently invited bids to hire cotton procurement agents, labor contractors, and a firm. The appointed agents and firm will facilitate the procurement process in various districts, including Rahim Yar Khan, Multan, Bahawalpur, and others.
Anticipation surrounds the TCP’s intervention as it is expected to bring about an upward shift in cotton prices. As of July-end this year, 1.429 million bales of cotton had been received in ginning factories nationwide.
In Punjab, 389,000 bales reached ginning factories, Balochistan saw 41,000 bales, and Sindh received 999,000 bales, with the majority converging in the Sanghar district. The distribution of cotton to Sanghar factories from coastal districts of Sindh is attributed to the lack of factories in those areas.
Textile mills have already purchased 1.28 million bales from ginning factories, and around 0.136 million bales remain available for sale. This year’s favorable conditions for cotton cultivation and improved weather conditions have led to increased ginning factory operations, with Punjab housing 182 and Sindh accommodating 186 factories.
This boost in production is expected to lead to a harvest of over 10 million bales, a significant milestone after a 12-year period, resulting in substantial savings on cotton and edible oil imports.
