KARACHI, Nov 24: As crisis in cotton economy is deepening, it is causing anxiety and uncertainty in textile industry which is looking for a way out by ensuring supply of quality cotton through higher import of lint cotton from India and other countries.The new cotton season began on negative reports of severe damage to the crop caused by mealy bug, and curl leaf virus attack in the upper Sindh and lower Punjab’s cotton growing belts.

Though initially the ministry of food, agriculture and livestock (Minfal) kept denying any such damage, the minister ultimately admitted the fact, and revised the crop estimate from 14.5 million bales to 12.8 million bales.

As a result of short supply of phutti from cotton fields to ginners owing to pest attack, coupled with delay in the opening of cotton bales of standing crop due to hot weather, raw cotton prices in the domestic market moved up to Rs3,300 per 40kg which crippled the spinning industry.

In the meantime, the spinning industry, which historically accumulates cotton stocks during first three months of the crop season (Oct to Dec) became desperate and looked for outside sources to meet their year-long raw material demand.

As crop situation worsened and private sector estimates put the crop size even lesser than what was officially projected, panic griped the spinning industry which entered large-scale import contacts of lint cotton.

It is being privately estimated that crop would not be more than 11 million bales and this would mean that huge quantity of around 4 to 5 million bales would have to be imported to meet the shortfall.

However, some analysts believe that many spindles may close down owing to high cost of production, coupled with recent Ogra decision to increase gas prices by 6.5 per cent and electricity prices by 23 per cent from early next year.

As a result of highly perplexed situation, the Pakistan Cotton Ginners’ Association (PCGA) has asked its 1,200 member-ginneries to close down for two days as a mark of protest against poor quality phutti being supplied to them by growers.

The PCGA alleged that growers were not only adding moisture, but are also putting wood and other material in phutti which was causing a lot of problems and the ginneries had been suffering financial losses.

They also complained that no government department was taking notice of such practices and it seems that things are deliberately allowed to happen.

The ginners’ body also took serious notice of large quantity of raw cotton import from India and said spinners have already entered into import contracts to the tune of 2 million bales.

Consequently, the PCGA called an emergent general body meeting on Sunday in Multan to sort out the issue after taking all members into confidence.

However, some private estimates believe that so far around 0.8 million bales have been booked for import from India and about 1.2 to 1.3 million bales have been contracted for import from US, Central Asia and other traditional sources.

It is encouraging to witness that raw cotton prices in the domestic market began to come down and on Saturday these were quoted lower by Rs150 per 40 kg at Rs3,150, and Punjab and Sindh varieties at Rs3,050 to Rs3,100.

The Karachi Cotton Association (KCA) spot rates were also quoted lower at Rs3,175 to Rs3,075 per 40 kg.

The phutti (seed cotton) prices also came down by Rs100 to Rs150 per 40 kg and are being quoted at Rs1,450 to Rs1,500 against previous rates of Rs1,600. The official phutti price was fixed at Rs1,075.

Meanwhile, textile mills have, so far, imported the highest-ever 190,055 metric tons or 1.24 million cotton bales worth $286.931 million (Rs17.371 billion) till Oct 31 from US, India and other sources due to crop shortage in the country, adds APP.

According to the provisional trade data of Federal Bureau of Statistics for July-October 2007, this is a phenomenal increase of 154.62 per cent in raw cotton import in just four months.

Mills had imported 81,839 MT or 491,034 bales of raw cotton worth $ 112.688 million during the same period last year (July-October 2006).

Chairman, Cotton Brokers Forum, Naseem Usman said that the news about the huge import of cotton has slowed down cotton trade at Karachi Cotton Association. The spot rate of Karachi Cotton Association (KCA) declined by Rs100 to Rs3,125 per bales of 37.3324 kg on Saturday due to lack of interest, he added.

Usman said that rates of a good quality cotton has also fallen in Punjab by Rs150 per bale due to declining demand.