PAKISTAN: Government to buy cotton to lift falling prices
The Pakistani government may buy up to one million bales of cotton as part of an official purchasing programme launched in an attempt to stabilise falling cotton prices in the country.
Pakistan's Prime Minister Syed Yousaf Raza Gilani on Tuesday (20 December) directed the finance ministry to release funds to buy 1m cotton bales (170m kg) through the Trading Corporation of Pakistan (TCP).
The prime minister also wants to set Minimum Support Prices (MSP) for raw cotton to help the country's cotton farmers.
According to Amanullah Qureshi, chairman of the Pakistan Cotton Ginners Association (PCGA), more than 2.2m bales are lying in ginning plants and they are now unable to purchase raw cotton from the farmers. He welcomed the government's move.
But Mohsin Aziz, chairman of the All Pakistan Textile Mills Association (APTMA), the government's intervention in the cotton market will lead to higher cotton costs and make it harder for the textile sector to compete in global markets.
The Karachi Cotton Association (KCA) added that any public sector intervention would bring to an end 16 years' of free trading in cotton.
Pakistan is the world's fourth largest producer and third largest consumer of cotton. Cotton prices in the country have fallen by more than 40% in the last six months due to a 15% rise in production this year.
Earlier this year the Chinese government begin building up the country's cotton reserves in a move designed to stabilise domestic cotton production and help avoid fluctuations in cotton prices.
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