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KCA opposes govt intervention in cotton trade
Aug '15
The Karachi Cotton Association (KCA) has opposed government intervention in cotton trade, saying it will distort the commodity's economy and hurt its exports, Pakistani newspapers have reported.

Referring to reports that the government is considering buying one million cotton bales to support growers, the KCA said such an exercise would be counterproductive.

In a statement, KCA Chairman Amin Hashwani said that while there is no dispute that cotton growers should get their due return on investments, procuring huge stocks of cotton from the market at considerably higher prices will create an artificial shortage of quality cotton and incur a loss of billions of rupees to the national exchequer.

The government's drive would also inflate cotton prices unrealistically rendering local textile industry uncompetitive, Hashwani said. It might also lead to closure of textile units and cause unemployment, he warned.

The KCA chief also feared that the objective to benefit growers would not be achieved because most of it will be realised by ginners and middlemen, as was witnessed last season.

Last year, the government intervened in the cotton market through the Trading Corporation of Pakistan (TCP) to procure cotton from ginners at inflated prices, but very little benefit was passed on to the growers and those stocks are still lying with the corporation, he maintained.

Hashwani suggested that instead of supporting growers indirectly through market intervention, the government should directly give subsidy on the basis of acreage sown as is the practice in other regional countries.

This would not only ensure direct benefit to growers but would also eliminate ginners and middlemen from the system and also check malpractices that usually accompanies market intervention. (SH)

Fibre2Fashion News Desk – India

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