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July 21, 2021

Govt mulls offering international price to cotton growers

LAHORE: The federal government is pursuing a proposal to offer an internationally competitive support price to cotton growers in the country to incentivise cultivation and to pump money into the rural economy.

Federal government has constituted a committee to determine cotton support price for local farmers under an innovative formula, which can eventually dole out 90 percent of prevalent international price plus freight charges.

Although the process of giving approval to the final cotton price mechanism runs at a snail’s pace, it has finally passed through the Economic Coordination Committee (ECC) of the Cabinet.

After dragging its feet for more than a month on the proposal submitted by Federal Ministry of Food Security and Research, the ECC, in its last meeting held on July 16, 2021, approved formation of Cotton Price Review Committee (CPRC) with a mandate to review market price and propose intervention on a fortnightly basis.

According to a senior official of the Food Security Ministry, farmers used to get 20 to 30 percent less than the prevalent prices in the international market. So, it would be a good deal for growers as well as the country given the fact that farmers would be encouraged to cultivate more cotton, thus saving precious foreign exchange reserves as well as pumping money in rural areas.

He acknowledged that local farmers were getting a good price for cotton in the ongoing season, which was already close to the international price. However, he emphasised that a new mechanism to offer internationally competitive cotton rates would help farmers increase production of the silver fibre that has been on a decline for last several years.

There have been several setbacks to the proposal submitted by the ministry about raising cotton price with a view to encourage farmers to grow more cotton. Earlier, ECC in its meeting held on June 28, 2021 under the chairmanship of Federal Minister for Finance and Revenue, Shaukat Tarin, deferred the decision of fixing cotton support price. Instead, regarding the proposal for Intervention Price for Cotton 2021-2022 Crop by the National Food and Research Division, the ECC constituted a committee to submit its report within 15 days.

Still, the proposal would go through stringent scrutiny from the pro-textile lobby in the cabinet, especially, the advisor on textile and industries, who has successfully opposed any such move in the past several years.

An official of the Ministry of Food Security also expressed the fear that there could be stumbling blocks hindering approval from the federal Cabinet due to opposition from the pro-textile lobby.

However, he said the prime minister and federal minister for food security have been fully supporting the idea of giving relief to local farmers. “Especially, Fakhar Imam is trying hard to get it through by all means.” He hastened to add that there was merit in the idea to provide a reasonable price to dejected cotton growers. Unless the government engaged local cotton growers positively, it was feared that the crop would ultimately vanish from our country.

He added that the PM himself might announce a package for cotton growers and other farmers in his upcoming visit to Multan by the end of the current month. Meanwhile, Ejaz Rao, a progressive cotton grower hailing from the prime cotton producing district of Bahawalpur said that so far the crop was fine despite a heavy spell of rain that struck a few days back. The presence of drought conditions prevalent at that time helped avoid the damage, which the downpour could have inflicted, as water disappeared due to evaporation or seepage.

Commenting on the price being offered to farmers, he said, growers who picked the crop before rain were happy as the price was Rs6,400/maund. But later, it dropped by Rs600 to Rs700 likely due to the Eid holidays.

Pakistan Kissan Ittehad (PKI) expressed satisfaction over the role of the Federal Ministry of Food Security in ensuring a fair price of cotton for farmers. PKI chief Khalid Khokhar suggested introducing the mechanism on a permanent basis, he said it was the only option to motivate cotton cultivation in the country. He maintained that it was the right of domestic farmers to get the price that was being offered to growers in other parts of the world.