Cotton cess rate may surge by 400pc to Rs250/bale

ISLAMABAD: The government is weighing to push the cotton cess rate up by 400 percent to Rs250/bale from Rs50 to collect Rs3.8 billion in revenues, without taking the stakeholders on board, The News has learnt.

“The Ministry of National Food Security & Research (MNFS&R) to this effect has worked out a new cess of Rs250/bale on both locally produced and imported cotton without consulting the textile industry, the main stakeholders,” a top government official told The News.

He said the existing cess of Rs50/bale was on local cotton only, but the ministry was now planning to impose the highly inflated proposed cess of Rs250/bale on imported cotton also, which had never been levied before.

“The country needs 14 million bales. This time production target is over 9 million bales and the textile industry will have to import 5 million bales again. But the government is going to impose a 400 percent higher cotton cess on 15 million bales to raise Rs3.8 billion,” the official said.

“Yes, the government has made up its mind to increase the cess by 400 percent to Rs250/bale from existing Rs50 per bale,” Shahid Sattar, Executive Director APTMA, confirmed to the News.

APTMA on Monday wrote a letter to Federal Minister for Commerce Syed Naveed Qamar. APTMA apprehended that the cess money would not be spent judiciously because PCCC (Pakistan Central Cotton Committee) had never been restructured as promised to focus on development.

“Performance of any research institute is based on the acreage of varieties developed by that institute, and in the last two decades, there is no variety in the field that was developed by the institutes under PCCC."

“This initiative has put the whole textile industry in an extremely perturbed situation as this increase in the cess will not only increase the cost of cotton causing a surge in the cost of doing business, but the collected amount of Rs3.8 billion will go into drainage as it will not be used in qualitative research and development by state-owned PCCC for better seed varieties keeping in view its story of failures in the past in producing a better seed for increasing the cotton yield per hectare.”

APTMA also argued that by increasing the cess rates, the cost of doing business would increase and this action would also foster business outside the ambit of regular compliance, which was already out of control.

The PCCC is an organisation that survives on cotton cess, 98 percent of the cess is spent upon the salaries of the organisation. Dr Javed Hasan, a well-known cotton expert, said there was a change in the environment and weather conditions and our research institutions failed to develop high-yielding varieties accordingly.

“Farmers could not get profit from low-yielding varieties and shifted to other crops like sugarcane, corn and rice,” Hasan said. He says according to the ICAC 2021-22 report, Pakistan ranks 41 among the countries in terms of per hectare yield which stands at 467kg/hectare.

“China is at the top of the countries in terms of cotton production. The cotton yield in China stands at 1,844kg per hectare.” Pakistan could utilise the technology from China to increase per hectare yield, he said adding that in Sindh the cotton sowing area decreased 13 percent because of the water shortage; however, in Punjab, the sowing area increased by 16 percent and overall by 7 percent.

“This time the target of cotton production stands at over 9 million bales which may not be achieved because of the low per hectare yield in the wake of not up-to-the-mark seed that PCCC has produced,” Hasan said.