Finance and Commerce ministries have rejected the proposal of textile ministry for procurement of seed cotton through Trade Corporation of Pakistan (TCP), terming it impracticable due to operational reasons and estimated financial loss of up to Rs 13 billion to the public exchequer, documents available with Business Recorder revealed.
However the Ministry of National Food Security and Research has supported textile ministry proposal while saying that TCP has the expertise, infrastructure and capacity for the gigantic task of procuring phutti from the farmers directly.
During 2014-15, due to fluctuating international lint prices, cotton growers suffered badly; average seed-cotton price during cotton picking season last year remained below the average cost of production calculated by Punjab Cost of Production Committee. It is expected that the cotton price trend during this year (2015-16) will not be much different from the previous year, which means that farmers cannot expect a fair return for their cotton crop.
The ministry of textile industry had sought proposals from all stakeholders for procurement of 13 million maunds of seed cotton (equivalent to one million bales) at the price of Rs 3000/40 kg to stabilise cotton market. The ministry is in the process of finalising a summary to be sent to Prime Minister being Minister In-charge for approval before placing it to ECC of the Cabinet for consideration.
The Commerce Ministry while opposing the Textile Ministry stated: “the ministry is of the view that the proposal for procurement of seed cotton (phutti) by government through TCP is impracticable due to operational reasons and open to visible estimated financial loss of Rs 8-13 billion to the public exchequer. Besides, having no expertise and trained human resources, this may result in further losses and will also be prone to corruption. Commerce ministry does not support the proposal of purchasing seed cotton (phutti) through TCP.
Finance ministry also responded negatively while saying that last year TCP procured 96,000 bales of lint against the target of one million bales. That procured quantity is still with TCP and has not been disposed-off due to market condition. Financial losses are estimated to be one billion rupees. TCP does not have the required technical and financial resources nor extended procurement network to support the procurement of 13 million maund of phutti.
Finance ministry further said that the proposed procurement of 13 million maund of phutti at the proposed intervention price of Rs 3,000/40 kg against market price.

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