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Business Recorder
2 days ago
- Business
- Business Recorder
Weekly Cotton Review: Prices steady, trading activity subdued
KARACHI: The cotton market is showing stability in prices, though trading activity remains subdued. New crop deals for the 2025-26 seasons are being finalized between Rs. 17,200 to Rs. 17,500 per maund, while phutti (seed cotton) is trading at Rs. 8,000 to Rs. 8,500 per 40 kg. According to industry sources, approximately 2,200 bales of the new crop have already arrived at ginning factories across the country. Currently, three ginning factories in Sindh and four in Punjab are partially operational. Market participants anticipate a significant uptick in trading after Eid-ul-Adha. Punjab's Secretary of Agriculture, Iftikhar Ali Soho, reported that the province has achieved 94% of its cotton cultivation target for the current season. Meanwhile, the textile industry has renewed its demand for the abolition of the Export Facilitation Scheme (EFS) and the removal of the 18% sales tax on locally produced cotton. Additionally, calls for eliminating the General Sales Tax (GST) persist, with expectations that the issue may be addressed in the upcoming budget. The Pakistan Cotton Ginners Association (PCGA) and the All Pakistan Textile Mills Association (APTMA) have jointly urged the government to scrap the EFS and abolish the 18% sales tax on domestic cotton. Chairman of the Cotton Ginners Forum (CGF), Ihsan-ul-Haq, warned that the entire cotton sector is grappling with the worst economic crisis in the country's history, stressing the need for immediate policy interventions to revive the industry. During the past week, the local cotton market saw stable prices for cotton. Trading remained limited as the partial arrival of the new cotton crop has begun. Currently, three ginning factories in Sindh province are partially operational, while four ginning factories in Punjab province have also partially started ginning. Partial arrival of phutti (seed cotton) from the lower regions of Sindh has commenced, with approximately 2,200 bales of phutti having reached ginning factories so far. Increased trading activity is expected after Eid-ul-Adha. The government has set a production target of one crore eighteen lakh bales for the new 2025-26 season. Currently, trading in the ongoing season is slow, with cotton prices ranging between 15,000 to 17,500 rupees per maund. Most transactions are being conducted on credit, with deals based on quality and payment conditions. The stock of cotton with ginners is gradually decreasing. Federal Minister for Trade Jam Kamal Khan has stated that the government is seriously working to eliminate the 18% general sales tax on local cotton in order to boost cotton production. He shared this during a press conference on Monday. The PHMA (Pakistan Hosiery Manufacturers Association) has urged the government to reduce electricity tariffs during peak hours to promote exports. In Sindh and Punjab provinces, cotton trading took place between 15,000 to 17,500 rupees per maund, depending on quality and payment conditions. New crop transactions were recorded at 17,000 to 17,500 rupees per maund, while phutti (seed cotton) was sold at 8,000 to 8,800 rupees per 40 kg. The Karachi Cotton Association's Spot Rate Committee maintained the spot rate stable at 16,700 rupees per maund. Naseem Usman, Chairman of the Karachi Cotton Brokers Forum, said that international cotton prices are experiencing fluctuations. New York cotton prices showed a mixed trend, with futures trading between 65.50 to 69 cents. According to the USDA's weekly export and sales report, 118,700 bales were sold for the year 2024-25. Vietnam remained at the top by purchasing 65,600 bales. Bangladesh secured the second position by buying 17,300 bales, while Turkey ranked third with 12,400 bales. For the year 2025-26, 13,800 bales were sold. Pakistan led the purchases with 7,600 bales, followed by Thailand in second place with 3,500 bales, and Peru in third place with 2,600 bales. Meanwhile, Punjab Agriculture Secretary Iftikhar Ali Sahu has informed the Business Club that cotton cultivation has been completed on over 33 lakh acres in Punjab, and the province has achieved 94% of the set target. He stated this while presiding over a high-level review meeting on the current situation of cotton. Punjab Agriculture Secretary Iftikhar Ali Sahu said that a unique and successful tradition has been established to improve cotton production through phased cultivation. Pakistan's cotton sector is facing its gravest financial crisis in decades, prompting swift government attention after urgent appeals from the Pakistan Cotton Ginners Association (PCGA) and the All Pakistan Textile Mills Association (Aptma). Both associations have launched a high-profile lobbying campaign, writing to Prime Minister Shehbaz Sharif and initiating a nationwide media blitz, demanding the immediate abolition of the Export Facilitation Scheme (EFS) or the removal of sales tax on domestically produced cotton and its by-products. The premier subsequently sought policy recommendations from the Ministry of National Food Security and Research (MNFSR). In response, the ministry has formally endorsed the industry's proposals. In a letter to PCGA President Dr Jassu Mal, Cotton Commissioner Dr Khadim Hussain stated that the government has recommended that the 18pc sales tax on domestic cotton, cottonseed, oilcake, and cottonseed oil be lifted immediately, or that imports of cotton, yarn, and grey cloth be taxed at the same rate. The ministry's recommendations, forwarded to safeguard farmers' incomes, revive local production, and stem Pakistan's soaring dependence on costly cotton imports, it says. The communiqué notes that Punjab has implemented targeted subsidies for farmers to increase their incomes and reduce production costs for various crops. Industry data reveals that textile mills have imported over 300 million kgs of cotton yarn and two million bales of cotton during the first nine months of 2024-25, draining billions of dollars in foreign exchange. Despite this, domestic production has fallen to a historic low of just 5.5m bales. Meanwhile, more than 200,000 bales of unsold cotton and vast stocks of yarn remain idle in factories, with demand at a standstill. Cotton Ginners Forum Chairman Ihsanul Haq says the fallout has been devastating as over 800 ginning units and 120 spinning mills have ceased to function, while hundreds more textile units are barely functioning. 'If the current policy persists, the sector risks total collapse,' he warns, adding that Pakistan may soon be forced to import not only cotton but also edible oil, compounding the country's financial woes. The MNFSR's recommendations underscore the urgency, recommending immediate tax relief for domestic producers or the imposition of equal taxes on imports to restore a level playing field. All eyes are now on the federal government, as the fate of Pakistan's cotton and textile industry hangs in the balance. Copyright Business Recorder, 2025
Business Recorder
26-05-2025
- Business
- Business Recorder
Weekly Cotton Review: Trading activities remain limited
KARACHI: The New York cotton market showed mixed trends, while local cotton prices remained stable. However, trading activities were limited. The Commerce Minister hinted at a possible sales tax exemption on local cotton and proposed including it in the new cotton policy. Meanwhile, Pakistan's textile industry is rapidly declining, as expressed by Kamran Arshad, Chairman of All Pakistan Textile Mills Association (APTMA). Similarly, Ehsanul Haq warned that the cotton industry could face the worst economic crisis in history. In Faisalabad, representatives from All Pakistan Textile Mills Association (APTMA), Pakistan Cotton Ginner's Association (PCGA), All Pakistan Textile Processing Mills Association (APTPMA) / Council of Power Looms Associations/ PYMA held a joint press conference regarding EFS (Export Facilitation Scheme) and highlighted related concerns. Ehsanul Haq, Chairman of the Cotton Ginners Association, stated that incorrect data from Federal Committee on Agriculture (FCA) and National Accounts Committee (NAC) has caused difficulties for stakeholders in cultivation, imports, and price determination, negatively impacting their strategic decision-making. During the past week, the local cotton market saw stable prices, but trading remained limited. Cotton deals were finalized at prices ranging from 16,700 to 17,500 rupees, depending on quality and condition. The stock of cotton with ginners is gradually decreasing. Advance deals for the new crop of 2025 - 2026 (Phutti and cotton) are taking place. In Sindh, Phutti was traded at 8,300 to 8,500 rupees per 40 kg, while cotton deals were made at 16,000 to 17,500 rupees per maund. It is said that by the third week of May, two or three ginning factories in Punjab are expected to partially start operations using Phutti from Sindh. In lower Sindh and several cotton-growing areas of Punjab, Phutti production is underway, and partial picking has also begun. The Federal Committee on Agriculture has set a production target of 10.18 million bales of cotton for the upcoming 2025-26 season. APTMA, PCGA, and FPCCI have repeatedly appealed to the government regarding the continuation of the Export Facilitation Scheme (EFS) and are persistently urging for its approval, but no decision has been made so far. Some circles remain hopeful that a solution will be proposed in the budget. Nevertheless, textile industries and PCGA cotton ginners continue to submit requests concerning EFS. FPCCI and various organizations have held meetings and press conferences, emphasizing the need for a level playing field by restoring the EFS facility, but no positive steps have been taken thus far. On the contrary, the Textile Value Added Association is demanding the continuation of EFS. A delegation comprising PCGA Chairman Dr. Jesumal Lemani, former Chairman Suhail Mahmood Haral, and APTMA Chairman Kamran Arshad met with Prime Minister Shehbaz Sharif, who assured them that the sales tax on local cotton and other taxes on by-products would be abolished in the budget. However, there is no confirmation yet on whether a final decision will be made in this regard. Meanwhile, the Pakistan Business Forum has demanded the removal of GST in the budget. Pakistan's textile industry is rapidly declining as the government has failed to address a critical flaw in the Export Facilitation Scheme for over 10 months. According to a press release by APTMA, the result is a severely flawed tax system that has rendered the local industry uncompetitive, destroyed domestic supply chains, and handed over Pakistan's textile value chain to foreign suppliers. Kamran Arshad, Chairman of the All Pakistan Textile Mills Association (APTMA), stated that the government must immediately remove yarn and fabric from the EFS import scheme. This is the only way to prevent the collapse of Pakistan's textile industry. In the provinces of Sindh and Punjab, the price of cotton per maund ranges between Rs16,000 and Rs 17,500, depending on quality and condition. Advance deals for the new crop have been settled at Rs 17,300 to Rs 17,500 per maund. The Spot Rate Committee of the Karachi Cotton Association has maintained the spot rate stable at Rs 16,700 per maund. Naseem Usman, Chairman of the Karachi Cotton Brokers Forum, said that international cotton prices remained stable. The price of New York cotton futures is currently trading between 66.00 and 70.00 American cents. According to the USDA's weekly export and sales report, sales for the 2024-25 season reached 141,400 bales. Vietnam remained the top buyer, purchasing 61,800 bales, while Turkey ranked second with 19,400 bales. Pakistan secured the third position by buying 18,700 bales. For the 2025-26 season, sales were 7,400 bales, with Honduras leading at 5,500 bales, followed by Vietnam in second place with 1,900 bales. Meanwhile, Federal Commerce Minister Jam Muhammad Kamal has informed the National Assembly that the government is developing a new textile policy, which is likely to include a proposal to exempt domestically produced cotton from the existing 11% sales tax. The minister also addressed the 30% retaliatory tariff imposed by the United States on Pakistan, which is currently suspended for 90 days. Exporters generally view this tariff as a challenge, though some believe it could also present an opportunity for Pakistani products in the U.S. market due to higher tariffs imposed on competing countries. To address these challenges, the Prime Minister has formed a steering committee and a working group tasked with conducting a detailed analysis of the U.S. retaliatory tariffs and formulating a policy response. The Commerce Ministry is collaborating with various ministries, departments, exporters, and relevant stakeholders to develop a strategy for effective engagement with US authorities. In the fiscal year 2023-24, Pakistan's exports to the United States amounted to $5.3 billion, while imports were $2.2 billion, resulting in a trade surplus of $3.1 billion, according to the Business Club. In the current fiscal year (until March 2025), Pakistan exported $4.4 billion worth of goods to the U.S. and imported $1.9 billion, maintaining a trade surplus of $2.5 billion. Pakistan's major exports to the U.S. include garments, medical equipment, and PET bottle-grade products, while key imports from the U.S. consist of cotton, iron and steel scrap, computers, petroleum products, soybeans, and almonds. Additionally, concerns have been raised that despite the start of the new cotton ginning season in the second week of May—a first in the country's history—the tax-free import of raw cotton and cotton yarn from abroad may push the entire cotton industry, including ginning, into the worst economic crisis in Pakistan's history. As a result, during the 2025-26 cotton season, the ginning and textile industry may operate at less than 50% of its full production capacity. This could force Pakistan to once again import billions of dollars' worth of cotton, along with billions in edible oil. Ehsan ul Haq, Chairman of the Cotton Ginners Forum, said that three ginning factories have become operational in Khanewal and Burewala in Punjab, while reports suggest one or two factories in Tando Adam, Sindh, will start operations by May 25. He stated that initial deals for new cotton are being settled between Rs. 17,000 to Rs. 17,500 per maund, while new phutti (seed cotton) is being traded at Rs. 8,300 to Rs. 8,500 per 40 kg. He further revealed that the federal government has allowed the import of cottonseed after nearly 50 years. However, reports indicate that some high-ranking government officials and private seed companies had previously imported cottonseed from China, Australia, the U.S., and Brazil for trial cultivation in various parts of Pakistan. These efforts failed largely due to environmental pollution caused by the lack of enforcement of crop zoning laws, which prevented the cotton crop from thriving. Haq emphasized that the current issue in Pakistan is not cotton production but its consumption. Despite the second-lowest cotton crop in history—only 5.5 million bales in the 2024-25 season—around 200,000 to 250,000 bales of unsold cotton remain in ginning factories. Additionally, cotton ginners have yet to receive hundreds of millions of rupees from textile mills for cotton sold on deferred payments. He also warned that cotton cultivation in some areas of Punjab, Sindh, and Balochistan is at risk due to canal water shortages and sudden temperature spikes, which may cause the crop to wither soon after sprouting. Furthermore, if the federal government does not abolish or domestically implement the Export Facilitation Scheme (EFS) in the upcoming budget, the country's cotton industry could face its worst economic crisis, leading to significant foreign exchange expenditures on imports of cotton, cotton yarn, grey cloth, and edible oil. The cotton sector is also troubled by the 'laughable' production figures released by the National Accounts Committee (NAC) for the past two years. This concern stems from previous miscalculations by the Federal Committee on Agriculture (FCA) regarding cotton cultivation and targets over the past decade. For the 2023-24 cotton season, the Pakistan Cotton Ginners Association (PCGA) reported total national production at 8.4 million bales, while the NAC projected an 'inflated figure' of 10.22 million bales. This discrepancy continues for the 2024-25 season, with PCGA reporting 5.5 million bales and NAC claiming 7.08 million bales. Ehsan ul Haq, Chairman of the Cotton Ginners Forum, emphasized that the incorrect statistics from the FCA and NAC create significant difficulties for stakeholders in formulating their strategies for cultivation, imports, and pricing. 'Inaccurate data could lead to a decline in cotton-based exports due to insufficient imports of raw cotton,' he warned. He stressed the importance of government institutions consistently releasing accurate cultivation and production statistics in their annual planning to help stakeholders avoid such complications. Meanwhile, both the Aptma and the PCGA have written to Prime Minister Shehbaz Sharif and launched an advertising campaign. Their message is clear: if the Export Facilitation Scheme is not abolished or its domestic application is not implemented, and if the 18 percent sales tax on cotton seed, cotton seed oil, and oil cake (khal banola) is not removed, the cotton ginning and textile sectors will find it nearly impossible to remain operational. Approximately 800 ginning factories and over 120 textile mills have already ceased operations due to this scheme. Copyright Business Recorder, 2025
Business Recorder
09-05-2025
- Business
- Business Recorder
National cotton policy: KCA hails APTMA-PCGA decision
LAHORE: The Karachi Cotton Association (KCA) has taken note of recent reports in the electronic media indicating that the All Pakistan Textile Mills Association (APTMA) and the Pakistan Cotton Ginners Association (PCGA) are collaborating to draft a National Cotton Policy, formulate a standardized sale/purchase contract for raw cotton, and work towards the revival of cotton production in the country. The KCA has expressed its appreciation for these efforts and reaffirmed its commitment to supporting initiatives aimed at revitalizing Pakistan's cotton sector. The KCA recalled that it has been consistently urging all stakeholders in the cotton economy to come together and develop a joint strategy for the government's consideration to boost cotton production. The objective is to meet the growing demands of the local textile industry, generate surplus for export to earn foreign exchange, and reduce reliance on cotton imports to conserve the country's valuable foreign reserves. However, despite repeated invitations, the KCA has yet to receive a positive response from other key players in the cotton trade for reasons that remain unclear. The association has repeatedly urged the government to take necessary steps to enhance cotton quality, improve bale packaging, and ensure a standardized weight of 170 kg per bale for the benefit of the entire cotton trade and industry. The KCA emphasized that cotton exporters, as secondary buyers, play a crucial role in stabilizing the market and protecting the interests of cotton growers. It further stressed that any National Cotton Policy should only be finalized after thorough consultations with all stakeholders, including the KCA, which serves as the premier body of Pakistan's cotton trade. The KCA highlighted that it had previously developed a draft for a local sale/purchase contract for raw cotton, incorporating provisions for arbitration under its bylaws in case of disputes between buyers and sellers. This draft was shared with APTMA and PCGA for approval. While PCGA endorsed the proposal, APTMA's approval remains pending. The KCA believes that since the draft contract was the result of extensive deliberations and has already been approved by both KCA and PCGA, APTMA should also consider endorsing it to avoid unnecessary delays in finalizing a new draft. The KCA has called upon the government to ensure that any National Cotton Policy is finalized and approved only after comprehensive consultations with all relevant stakeholders, including the KCA. Additionally, the association has urged authorities to implement measures aimed at increasing cotton production, improving quality, standardizing bale weights, and enhancing packaging to support the broader cotton trade and industry. Copyright Business Recorder, 2025
Business Recorder
05-05-2025
- Business
- Business Recorder
Weekly Cotton Review: Prices surge amid improved trading volumes
KARACHI: Last week, the cotton market witnessed a significant surge in prices alongside improved trading volumes, while cotton picking has also commenced in the lower Sindh regions. According to Chairman Cotton Ginners Forum Ehsan ul Haq initial activity has been observed in the buying and selling of cotton advance deals, generating positive expectations among traders. Internationally, a slight recovery in New York cotton market prices was recorded following a downturn, which proved encouraging for the local market. However, the government-level deadlock over the Export Finance Scheme (EFS) issue still persists, with indications that measures to resolve it will be announced in the upcoming budget. The Federal Committee on Agriculture (FCA) has set a cotton production target of 10.18 million bales from 2.2 million hectares for 2025-26. Experts emphasise that the revival of the cotton industry depends on strengthening agricultural research institutions and the effective use of modern technology. However, Head Transfer of Technology Central Cotton Research Institute Multan Sajid Mahmoud stressed the need to ensure farmers receive quality seeds and resources. During the past week, the local cotton market experienced an overall upward trend in cotton prices. Needy mills were settled at prices ranging from 15,500 to 17,500 rupees per maund, depending on quality and payment conditions. The trading volume remained relatively better. New York cotton prices showed a mixed trend, though the upward factor remained dominant. APTMA, PCGA, and FPCCI continued to protest against the EFS facility, appealing and pleading with the government to ensure a level playing field, but no attention is being given. Disappointed by the government's delaying tactics, PCGA Chairman Dr Jesumal Lemnani has sent a special letter to the Army Chief and the Chief Justice of the Supreme Court of Pakistan, urging their intervention. Additionally, news is circulating about the upcoming 2025-26 cotton season. Reports suggest that cotton will be cultivated on 35 lac acres in Punjab province, while Sindh province is expected to see cultivation on 15 lac acres. The target for cotton cultivation in Punjab province for the current season has been set at 35 lac acres. This was stated by Punjab Agriculture Secretary Iftikhar Ali Sahu while chairing a high-level review meeting on the status of cotton at the Agriculture House. He emphasised that all possible resources are being mobilized to achieve the cotton cultivation target. Field formations have been tasked with achieving 100% of the target by May 15, and through timely and specialized campaigns, 28% of the total target has already been met He further mentioned that technical guidance for the care of early cotton cultivation is ongoing, and practical measures are being taken to ensure the availability of canal water in cotton-growing areas. He clarified that 50% of the total cotton cultivation target will be achieved from the Bahawalpur Division, adding that the current trends in cotton cultivation this year are highly encouraging. In the provinces of Sindh and Punjab, the price of quality cotton, based on payment conditions, currently ranges between 15,500 to 17,500 rupees per maund. The Spot Rate Committee of the Karachi Cotton Association has maintained the spot rate stable at 16,700 rupees per maund. Naseem Usman, Chairman of the Karachi Cotton Brokers Forum, stated that international cotton prices have shown a mixed trend. After fluctuations in New York cotton futures, there was an upward trend, with prices ranging between 68.41 and 69.91 American cents per pound. According to the USDA's weekly export and sales report, 108,400 bales were sold for the year 2024-25. Malaysia remained the top buyer with 25,600 bales, followed by Bangladesh with 25,400 bales, and Vietnam in third place with 15,200 bales. For the year 2025-26, a total of 32,900 bales were sold. Indonesia led with 15,800 bales, Pakistan secured the second position with 15,400 bales, and China ranked third with 900 bales. The international cotton market showed improvement due to a decline in the dollar index, recovering from its lowest level in over two weeks. The reason behind recovery is indications from China's Ministry of Commerce regarding progress in improving US-China trade relations Meanwhile, in coastal cities of Sindh, the extremely limited-scale picking of the new cotton crop has begun, leading to the initiation of advance cotton contracts. For the first time in Pakistan's history, there is a possibility that the new cotton ginning season will commence in the first week of May. Chairman Cotton Ginners Forum Ehsan ul Haq said that advance contracts for cotton from the new crop in Pakistan have commenced during the initial phase. Initially, two ginning factories in Punjab's cities of Burewala and Mandi Jahanian have finalized advance sales deals for 600 bales of cotton, priced between Rs17,000 to Rs17,300 per maund, based on delivery scheduled between May 10 and 15. Meanwhile, these factories procured cotton from coastal areas of Sindh at Rs8,300 to Rs8,500 per 40 kilograms. They stated that cotton picking has begun in very limited quantities in some coastal regions of Sindh, which is being purchased by cotton ginners from Punjab. Sajid Mahmood, Head of the Technology Transfer Department at the Central Cotton Research Institute (CCRI) Multan in a telephonic conversation with this scribe, stated that credible reports indicate Pakistan is expected to import approximately $3 billion worth of cotton this year. This not only imposes a significant financial burden on the national economy but also underscores the deep-rooted challenges facing the domestic cotton sector. The scale of these imports reflects a critical gap in local production, which currently falls short of meeting national demand—an outcome shaped by a combination of administrative, technical, and research limitations. He stressed that in such a scenario, the importance of research and development in cotton becomes even more vital. However, institutions like the Pakistan Central Cotton Committee (PCCC)—a key national body—are facing severe shortages in research funding, which hampers the pace and quality of scientific innovation. Mahmood also noted that pending cess payments from the textile industry remain unresolved, and their timely clearance could significantly support the strengthening of the research infrastructure. Highlighting the constraints within the PCCC, he shared that only 28% of sanctioned positions are currently filled by agricultural scientists and technical staff. This shortage of skilled manpower severely restricts the continuity and expansion of research activities. Additionally, challenges such as the untimely availability of agricultural inputs for field trials and limited operational budgets are affecting the overall effectiveness and outcomes of research programs. Sajid Mahmood emphasised that these challenges directly impact cotton growers, who urgently require improved seed varieties, climate-resilient technologies, and cost-reduction strategies. Declining per-acre yields and weakened market competitiveness are clear signs that more robust research, timely advisory services, and efficient technology transfer mechanisms are urgently needed. He concluded by stating that saving foreign exchange, supporting farmers, and reviving the cotton sector will require a firm commitment to strengthening research institutions. This includes ensuring sustained resource allocation and making science-based decisions aimed at enhancing cotton productivity and sustainability in Pakistan. Copyright Business Recorder, 2025
Business Recorder
28-04-2025
- Business
- Business Recorder
Weekly Cotton Review: Prices stable amid low trading activity
KARACHI: Cotton prices have shown overall stability, while trading activity remained limited. New York cotton futures also recorded an improvement in prices. Indications suggest that the EFS (Export Finance Scheme) matter may be postponed until the budget. Frustrated with the government, the PCGA (Pakistan Cotton Ginners Association) has reportedly sent a letter to the Chief Justice of the Supreme Court after approaching the Army Chief, seeking judicial intervention in the matter. Meanwhile, the import bill is rising due to rising imports of cotton, cotton yarn, and textiles, as highlighted by Shahid Rasheed Butt, former President of the Islamabad Chamber of Commerce and Industry. Head Transfer of Technology Central Cotton Research Institute Multan Sajid Mahmood has said that the 18% sales tax on local cotton and the EFS facility on imported cotton are becoming an additional burden for cotton farmers and local industries. During the past week, the local cotton market overall remained stable. Trading took place between 15,500 to 17,500 rupees per maund, depending on quality and payment conditions. Interested mills are showing some interest in purchasing cotton, but ginners' stock of cotton is gradually decreasing. However, imported cotton is also arriving rapidly, and mills are making payments for it, which is causing a financial strain in the local market. Additionally, cotton yarn and fabric are also being imported, causing distress among textile spinners as they are finding it difficult to sell their yarn. On the other hand, weaving sector is also being affected. FPCCI, APTMA, PCGA, and other organisations have held several meetings with the relevant government departments regarding EFS. PCGA, disappointed with the situation, has even written a letter to the Army Chief, appealing for support in resolving EFS-related issues for cotton restoration and addressing ginning problems. It is being said that a decision on this matter will be made in the upcoming budget. Various reports are circulating about the ongoing cotton cultivation. In some areas condition of cotton crop is good, while others are facing complaints of water shortage. On the other hand, the intensity of the heat is also raising concerns about its impact on newly sprouted plants. In several regions, delays in cotton sowing may occur due to water-related issues. On the other hand, the import bill is increasing due to the import of cotton, yarn, and fabric. Shahid Rasheed Butt, former president of the Islamabad Chamber of Commerce, has stated that the rising competition in the global textile market is a cause for concern for Pakistan, which is also increasing global competition and the business costs of the textile sector. The decline in cotton production is further adding to the burden on the import bill. Additionally, disappointed by the government's delayed response, Dr Jassu Mal Leemani, Chairman of PCGA, has written a letter to the Chief Justice of the Supreme Court of Pakistan after the Army Chief, requesting symbolic intervention regarding discriminatory treatment against local cotton farmers. The letter also highlights the difficulties faced by local textile spinners, manufacturers, and cotton farmers due to the restoration of cotton and issues related to GST and EFS, urging intervention to ensure a level playing field. The rate of cotton in Punjab and Sindh as per quality and condition is in between Rs 15,500 to Rs 17,500 per maund. The Spot Rate Committee of the Karachi Cotton Association kept unchanged the rate at Rs 16,700 per maund. Naseem Usman, Chairman of the Karachi Cotton Brokers Forum said that international cotton prices remained stable overall. The price of New York cotton futures is currently trading between 68 to 70 cents per pound. According to the USDA's weekly export and sales report, sales for the 2024-25 season reached 104,000 bales. Vietnam remained at the top by purchasing 34,400 bales. India secured the second position by buying 22,500 bales, while Pakistan ranked third with purchases of 16,500 bales. For the 2025-26 season, 38,000 bales were sold. Indonesia led the purchases with 13,200 bales, followed by Peru in second place with 9,700 bales, and Honduras in third place with 9,300 bales. Chairman PCGA Dr Jassu Mal has written a letter highlighting a critical issue severely impacting Pakistan's agricultural sector— the unfair tax policies that disadvantage local cotton farmers and ginners while favouring imported cotton. The letter emphasizes the urgent need for policy reforms to address this imbalance, which is crippling the domestic cotton industry. Local cotton farmers and ginners face an excessive tax burden, including an 18% General Sales Tax (GST) on ginning, along with multiple withholding and indirect taxes. In stark contrast, imported cotton enjoys a complete exemption from these taxes, entering the country with zero percent sales tax and no import duties. This discriminatory policy has led to a steady decline in cotton cultivation and production, as farmers struggle to compete with cheaper, tax-free imports. The injustice has forced many farmers to abandon cotton in favour of other crops such as sugarcane, rice, and maize, which receive better government support and face fewer tax hurdles. This shift poses a serious threat to Pakistan's textile industry, a cornerstone of the national economy and a major source of employment and export revenue. The letter said that major cotton-producing nations including India, China, the United States, and Brazil, actively protect their domestic cotton industries by imposing import duties and taxes on foreign cotton. These countries also provide subsidies and incentives to their farmers, ensuring the sustainability of their agricultural sectors. Pakistan; however, does the opposite— taxing local producers heavily while allowing imported cotton to enter tax-free, creating an uneven playing field that stifles domestic growth. This policy not only violates constitutional principles of equity and justice but also undermines economic fairness. Dr Mal clarifies that this is not a plea for subsidies but a demand for equal treatment, urging the government to eliminate policies that penalize local producers in favour of foreign imports. He has appealed for immediate intervention, requesting a thorough review of current tax policies. The letter calls for urgent reforms to restore confidence in Pakistan's agricultural sector and ensure justice for cotton farmers and ginners, whose livelihoods are at stake. Without corrective measures, the continued decline of cotton farming could have far-reaching consequences for the country's economy and employment landscape. However, Sajid Mahmood, Head of the Technology Transfer Department at the Central Cotton Research Institute (CCRI), Multan, while speaking to Naseem Usman, highlighted the mounting challenges facing Pakistan's cotton sector. He noted that the imposition of an 18% sales tax on locally produced cotton and its value-added products is placing an additional burden on both growers and the domestic textile industry. Simultaneously, the allowance of duty-free import of cotton under the Export Finance Scheme (EFS) is undermining the competitive position of local producers. He further pointed out that policies encouraging large-scale imports of cotton and soybeans from the United States, coupled with the persistent under-funding of the Pakistan Central Cotton Committee (PCCC), the country's premier cotton research institution, have created uncertainty among farmers regarding the viability and future of cotton cultivation. Copyright Business Recorder, 2025
