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Matter of cotton support price

It seemed that the tug of war between the textile lobby and growers had been won by the former when the Economic Coordination Committee (ECC) of the cabinet rejected the proposal of the Ministry of National Food Security on May 7 to set the support price

Updated May 16 2020

It seemed that the tug of war between the textile lobby and growers had been won by the former when the Economic Coordination Committee (ECC) of the cabinet rejected the proposal of the Ministry of National Food Security on May 7 to set the support price for cotton at Rs4200. But now that the federal cabinet has turned down that decision and sent the matter back to ECC for reconsideration, thanks in no small part to Foreign Minister Shah Mahmood Qureshi - himself a cotton grower - standing up in favour of the food ministry, it is open for a serious debate all over again. That throws the ball back into the textile industry's court, represented quite ably at the top level by the PM's advisor on commerce, Razzaq Dawood. Apparently, the prime minister now wants the support price to be fixed after 'thorough consultations with all stakeholders' to encourage farmers to sow more cotton as the area under cultivation has been declining continuously for years. Since 2010, for example, cotton cultivation in the country has dropped by about 20 percent, with farmers dejected by little or no official support forced to turn their attention to different crops, particularly sugarcane.
The decision to do away with the cotton support price was initially taken at the behest of textile exporters, of course. Previously, cotton's support price was fixed just like sugar's and wheat's. But then exporters complained that locally produced cotton didn't meet international quality standards, preventing them from adding value to their products which undermined their export targets and earnings. That is why they argued in favour of the government allowing import of cotton. And textile millers who use the commodity for production of yarn or cloth and garments should be free to procure locally or import so the export effort does not suffer due to quality considerations. So exporters could fetch the right product at the right price in the international market to keep up quality, commerce, revenue, etc. The argument about quality only strengthened with the arrival of contamination-free cotton while local cotton picking was still done by hand. Yet while this arrangement got a lot more textile exporters laughing all the way to the bank, it also threatened to price a lot of growers right out of the market. Of the 15 million bales of cotton required for the financial year 2020, for example, only about half will be produced locally; which does not bode well for the local farmer or for the agrarian economy.
The result of all this has been that over the years, the cotton growing land increasingly turned towards sugarcane cultivation. Both crops grow in the same period while sugarcane is also a lot less labour-intensive than cotton. Besides, sugarcane has a fixed support price which obviously makes it only natural for farmers to find it more attractive than growing cotton; which would have left them at the mercy of the market forces. And they would simply have had nowhere to go if there was a dip in the international price of cotton, since everybody would simply buy from the foreign market. But now we have reached a point where sugarcane cultivation far exceeds the country's requirements. It was this fast paced production that led to the mania of some if not most of the country's most prominent politicians owning sugar mills. In fact over time, the sugar aristocracy came to represent the intersection between powerful office and big money in the country's political folklore. And now sugar production in the country also exceeds local demand, leading to all sorts of manipulation of the market, official inquiries, threats of heads rolling, etc.
All this shows that the issue of setting a support price for the cotton crop is indeed very important and it should not be held hostage by the financial interests of one or two powerful lobbies. Such irritants have already eaten up what should have been a good decade of production, employment and earnings, at least, and threaten to keep the local industry paralysed till they are settled. It is, therefore, up to the government to step in and settle the issue once and for all. It should make sure that all stakeholders reason out their differences and come up with different policies for the short and long-terms. It should also ensure that farmers have everything they need, within reasonable limits, to grow high quality contamination-free cotton and we make the right investments in research to protect and enhance our yield, otherwise the cotton growing area will just keep shrinking.

Copyright Business Recorder, 2020