STAFF REPORT ISB: Pakistans cotton sector appears divided over the desirability for support price of cotton (phutti) as well as the governments decision to procure 1 million bales to bring about stability in cotton trade at a time when prices are globally under pressure over low demand.

The Economic Coordination Committee (ECC) of the Cabinet has early this month announced minimum support price for phutti at Rs3,000 per 40 kilograms for this fiscal year and to procure 1m bales through the Trading Corporation of Pakistan. Before the new crop started arriving in the middle of June, the price was moving around Rs6,500 per maund.

The APTMA has supported the ECC decision on support price.

The APTMA would like the average farmers to keep growing cotton instead of shifting to other crops. But cotton brokers have rejected the ECC decisions saying these have been taken under political pressure and are unlikely to be implemented in letter and spirit. They warned of a surge in import of cotton as they be cheaper under the circumstances.Lower cotton prices are seen helping the spinners improve margins, and some closed units have resumed production.

The cotton ginners have welcomed the decisions and hope the government policy would revitalise cotton trading at local markets. Pakistan is expected to produce about 14m bales this year.

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