Exploiting the deal once again, the Indian cotton exporters have backed out from the made commitment of delivering 50,000 bales of cotton to Pakistan. They reason is demand for rates more than what were decided at, first place, while booking, back in November/December 2016.
According to the industry sources, the deals were registered at the price of 73 to 75 US cents per pound. The current lint price is around 83 to 85 US cents per pound. “Indian exporters now want either cancellation of all the deals or an increase in the price,” one importer said. “Local mills are coming back and buying from the local market, they are in trouble.”
Further said is that the delivery of cotton was expected in January/February. They said the state-owned Department of Plant Protection (DPP) disrupted cotton supply from India in November-December 2016. The DPP discontinued import of lint from India despite the arrival of 12,000 bales at the port on November 20. Around 10 spinning mills had imported the lint, but the government held them at the port and ordered their re-exports. Following such orders, some mills had received stay orders from the courts as well.
However, a meeting of the All Pakistan Textile Mills Association and officials of DPP in December 2016 sorted out the matter and thereby the government allowed conditional delivery of 12,000 bales and further import from India. Textile mills said they need more imports as the local crop is not sufficient, especially in view of the announcement of exports incentive package that encourages a rise in exports from mainly textile industry.
Because of a gap in demand and supply, Pakistani millers have booked import orders for 2.3 million bales from India, China, US, Sudan and South Africa. Around 0.7 million bales were booked from India. “Since India is nearby and even Wagah border is opened for lint delivery, it is feasible compared to imports from other countries,” said an industry official.
Pakistan’s total cotton demand is around 14.5 to 16 million bales. Pakistan Cotton Ginners Association recorded cotton arrival, till 31 January, at 10.63 million bales, 10.63 percent higher than the last year. Industry officials said the fate of another 200,000 bales, that is expected to come from India, is also hanging in the balance after the price issue. Said is that the India has previously used these tactics back in 2012/13 when the prices were raised suddenly soon after the trade deal was made. While talking about the reaction of Pakistan on the matter the officials said that; “Importers are likely to move to the International Cotton Advisory Committee against the Indian exporters, who violated the agreements or were using delaying tactics in other delivery after the price hike.”
According to the officials, the reason for the insufficient growth of cotton in Pakistan is the increasing sugar mills and lack of proper seed and effective pesticides. The area under cotton cultivation in Punjab has reduced for more than 20% as some areas have gone to the major crops, as said by the experts.
