Cotton support price a good gesture but lacks tangible delivery mechanism

LAHORE: The cotton seed support price announced by the federal government at Rs8,500/40kg is a good gesture for encouraging farmers to cultivate more silver fibre, but the announcement lacks a tangible delivery mechanism.

The incumbent government has taken the decision to fix support price just ahead of cotton sowing in the country. It is a somewhat timely decision as cotton cultivation in Sindh starts on March 15, while in Punjab it is advised to grow cotton from April 1.

Fixing of a support price a couple of months ahead of the cotton sowing season could have a far reaching impact, as majority of sugarcane growers might be able to switch to cotton cultivation. Sugarcane harvesting started in late December last year, and farmers should be in a better position to embrace cotton sowing.

This step can be considered vital as the water-guzzler sugarcane crop unnecessarily trespassed in the key primary cotton zone in the south, thus shrinking the silver fibre’s acreage to a great extent.

Moreover, price announced by the government is much lower than the prevalent prices. Last year, the Ministry of National Food Security proposed intervention price of seed cotton at Rs6,000/40kg in what was claimed to provide a fair rate of return to the farmers.

However, since then, a tsunami of inflation hit the masses hard and farmers now feel that this price should be set at Rs10,500/40kg. They were of the view that if the government wanted to increase cotton production to meet the demand of the domestic market, cotton plantation should be made profitable by both decreasing cost of production and ensuring better return to growers.

Government should also constitute cotton price review committee to proactively watch the market in order to safeguard the interests of farmers. The announcement to fix the cotton support price at Rs8,500/40kg this year was approved in principle by Prime Minister Muhammad Shahbaz Sharif. It would be submitted to the Economic Coordination Committee (ECC) for approval as soon as possible.

However, this whole exercise would merely be cosmetic if the Trading Corporation of Pakistan (TCP) is not entrusted the task to intervene in the market by procuring cotton at fixed price as and when needed.

For this purpose, the government should extend a cash credit limit (CCL) to the TCP, so it can procure at least 1.5 million bales of cotton at the intervention price. Such a step would give a tangible boast to cotton cultivation in the country.

However, keeping in view the current liquidity crunch faced by the government, the extension of CCL to the TCP could be a distant reality. It should be noted that as per the Ministry of National Food Security and Research, Pakistan has the potential to produce 20 million bales, as compared to less than 5 million bales produced in the outgoing season.

According to a report, to harness the potential, the government needs to regain the historic cotton cultivation area, support farmers with appropriate technology, and ensure a fair price for the growers.