Pakistan: Cotton export may add Rs two billion to national exchequer in 2011-12

Pakistan may add Rs 2 billion to the national exchequer by exporting one million cotton bales in 2011-12 as bumper crop is expected this year. Well-placed sources told Business Recorder here on Thursday that the country is expecting nearly 30 percent more production from cotton growing areas all over the country.

The reasons behind the growth can be attributed to the favourable weather and the rice and sugar cane farmers' interest in producing cotton rather than the other major crops due to its high prices in both national and international markets. The previous cotton crop in the local market was being sold at the very high rates, eg, the lint cotton price touched the ever high mark of Rs 13, 000 per maund of 37.324 kg ex-gin which works out to be US Cents 185.0/lb ex-gin during February-March 2011.

Pakistan missed the cotton production target for 2010-11 by producing 11.7 million bales against the target of 14 million bales due to devastating floods. The estimated loss to the cotton crop due to last year's flash floods in cotton growing areas of Punjab and Sindh stands at over Rs 120 billion. So, due to less crop production, the country has already imported two million bales of cotton worth Rs 40 billion from India while deals of 4-5 lac bales are still in the pipeline.

" The country is expecting 15-16 million bales this year which clearly means that we would no more require to import 2.4 million bales from India which would save Rs 3.5-4 billion while by exporting one million bales, the country can earn Rs 2 billion in 2011-12", sources acknowledged.

Sources said, "Most of the sugarcane growers are not being paid by the sugar mill owners. According to an estimate an amount of Rs 7 billion of the poor farmers are still stuck and the sugar mill owners are not ready to pay even a single penny. According to the Cane Act, the sugar millers have to pay all the money to the farmers within 15 days of procurement of sugarcane from them and afterwards if any sugar mill owner does not pay the farmer within this specific timeframe, then he is supposed to pay the mark up as well. But these Rs 7 billion are stuck for the last 2-3 years and even the provincial cane commissioner are doing nothing to provide the farmers their due amount".

Sources disclosed that in the domestic market urea that is considered to be one of the essential fertilisers to increase the crop productivity is currently facing shortage in the local market. "Urea is available in market but just for those farmers who can afford it at Rs 1,550-1,600 per 50 kg rather than at Rs 1,250 per 50 kg, its original price", sources added.

They maintained "it is being expected that 50,000 tons urea will reach the country in the very first week of July. After that, the urea prices in domestic market are expected to reach Rs 1, 250/50 kg". It is worth mentioning here that the cotton area in almost all prominent cotton producing countries such as China, India, US, Pakistan and Uzbekistan would be increased considerably.