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Textile sector under the pressure of spiraling cotton prices
Aug '08
Textile industry of Pakistan, one of the largest foreign exchange earners of the country, having an export share of 55 percent in the country, is finding it difficult to sustain operations and remain competitive in the international market due to record high cotton prices.

Since cotton is the key input material for production of textile goods, a price hike is likely to shatter manufacturers who were already unable to bear the increased cost of high energy prices.

Cotton prices have settled at a record high of Rs4400 per bale in the market. Experts have gone to the extent of saying that even the revised energy prices could have been manageable, but not a spike in cotton prices which is likely to make Pakistani textile products more expensive and less competitive in the global market.

While some believe that this prevalent price rise is due to global shortage of cotton and reduced domestic production this year, others have pointed out reasons completely different.

In an exclusive interview with Fibre2fashion, Mr Ghulam Rabbani, Director of Karachi Cotton Association singled out various other reasons that have pulled up cotton prices. According to him, “the chief factor is devaluation of rupee against dollar which has not only forced domestic cotton prices to rise but has also made imported cotton more expensive. Additionally, floods in major cotton growing sectors like areas starting from Sutluj River range up to district Vehari has also resulted in low cotton produce and the consequent increase in prices. Moreover, a loss of another 350,000 bales in the Indus delta range of Dajal, Kot Mithan & District Rajanpur has also impacted the overall cotton output to a considerable extent.”

However, local traders in the industry believe that cotton prices in the market are also under pressure due to mealy bug attack on crop being harvested in the rain affected areas of Punjab and Sindh. Because of loss caused by these infested crops, cotton yield is likely to be brought down from the estimated target of 14 million bales to 12. million bales.

Even exports declined by 3 percent in the first month of this current fiscal year in spite of an increase in the overall export volume.

Mr Ghulam Rabbani also revealed that as part of the remedial measure, the Federal Government has inked an accord with the Buyer Corporation Germany and Monsanto Corporation USA for providing quality seed of different varieties which is expected to increase the crop yields.

Fibre2fashion News Desk - India

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