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The govt. is terribly pleased with this yr’s cotton bumper crop. They shouldn’t be. 




ISLAMABAD: The chest thumping was audible on Tuesday when Pakistan’s interim Commerce Minister Gohar Ejaz proudly introduced that cotton arrivals in Pakistan had already crossed 5 million bales this yr with a complete quarter left within the yr. 

Whereas the thumping might have been barely muted by the commerce minister proudly posting an image of a discipline of white flowers mistaking it for cotton (made worse by the truth that earlier than his newest tryst as a authorities minister Mr Ejaz was Chairman of the All Pakistan Textile Mills Affiliation whose enterprise is predicated totally on cotton) there may be a lot to be taken away from this yr’s cotton output. 

In line with knowledge offered by the commerce ministry, 5 million bales of cotton have already been delivered to ginning factories with three months to go within the season. 

Final yr, Pakistan noticed its lowest ever output for cotton when the nation produced solely 4.8 million bales of cotton. In consequence, the export-oriented textile business needed to import cotton from america to fulfill the shortfall which was tough as a result of imports had been restricted within the nation. This led to textile factories shuttering their doorways for lengthy intervals of time. So how have issues rotated so shortly this yr? Basically due to a trick of the worldwide cotton market.

Some context 

Pakistan’s cotton has been struggling for the previous few a long time. From the early Nineteen Eighties up till round 2008 white lint was one of the standard crops in the complete nation. In line with a 2021 report of the Worldwide Meals Coverage Analysis Institute (IFPRI), uncooked cotton consumption grew at an annual progress fee of seven% between 1982 and 2008. Actually, 2008 was witness to the most important cotton crop in Pakistan’s historical past at 15.6 million bales. It was a reasonably neat system. Textile mills wanted a number of cotton to provide garments and export them and farmers knew that in the event that they grew cotton they might have particular consumers. All in all it was a perfect state of affairs. 

Till it wasn’t. 

Between 2007-8 Pakistan was hit by the worldwide recession. The textile business confronted challenges as a result of excessive power prices, rupee depreciation vis-à-vis the US $ and different currencies, and a excessive value of doing enterprise. In consequence, there was a discount within the variety of textile mills working within the nation from about 450 items in 2009 to 400 items in 2019. This lower has concurrently seen the home demand for cotton dip within the nation. On this time cotton has fallen out of demand, turn into internationally uncompetitive, and output has fallen by a whopping 65% from 14 million bales being produced in 2005 to 4.9 million bales being produced in 2023.

So what occurred this yr? 

The expectations this yr had been excessive. Cotton usually has fallen out of favour however climate patterns this yr it appeared the climate would allow a better yield. On high of this August proved fateful. Because the Kharif season was beginning, the Buying and selling Company of Pakistan (TCP) entered the cotton market to stabilise the white lint costs. TCP introduced it will buy a million bales of lint to stabilise the market in order that the growers might get the minimal fee of Rs8,500 per maund as promised by the federal government on the outset of the sowing season to woo the farmers again to the crop.

However why was the federal government immediately so considering cotton? Basically, america was hit with a low manufacturing yr. Cotton manufacturing within the US in 2022-23 is forecast to fall by 3.7 million bales from the earlier advertising and marketing yr (MY) to 13.8 million bales, the bottom manufacturing stage in seven years. This may lead to US cotton exports for MY 2022-23 to fall at 12.5 million bales, down by 100,000 bales from the earlier month’s forecast and 14 per cent decrease than MY 2021-22, in line with the US division of agriculture (USDA).

US Cotton was dealing with the identical points as Pakistan — excessive temperatures and drought in Texas, the place 40 p.c of US cotton manufacturing happens, have slashed manufacturing and exportable provides. In consequence international commerce is down by almost one million bales from the earlier month’s forecast.

The right storm

It’s a case of issues falling precisely in place. On the one hand US anticipated output fell considerably. General cotton costs improved within the home market as textile millers and spinners confirmed their curiosity in shopping for over the past week, whereas the standard of lint reaching ginning factories additionally bought comparatively higher as a result of finish of rains within the cotton belt leading to lowered moisture in phutti (uncooked cotton). The shopping for curiosity was strengthened by stories that the TCP had ready a technique to buy a million bales and had appointed brokers in numerous cotton districts for the aim.

There was a short second of fear when the cotton crop in Punjab confronted an onslaught from whiteflies, which proved to be a nightmare for growers and agriculture division high-ups giving them sleepless nights. Nevertheless, the federal government of Punjab to their credit score swooped in with effectivity and used helicopters As of September 30, 2023, the nation witnessed an astounding achievement with cotton arrivals surpassing the 5 million bales mark, reflecting a formidable year-on-year progress fee of 71%.

As per knowledge shared by the Ministry of Commerce, the sector, which confronted a devastating 34% year-on-year decline in manufacturing as a result of catastrophic flooding, has not solely managed to recuperate however has exceeded all projections for this yr.

Key yield figures present that:

– Pakistan: 5.0 million bales, marking a exceptional 71% year-on-year enhance.

– Punjab: 2.1 million bales, showcasing a commendable 34% year-on-year progress.

– Sindh: 3.0 million bales, reaching an astonishing 113% year-on-year surge.

Dr. Gohar Ejaz, the Minister for Commerce, expressed his optimism for the cotton sector’s future, stating, “Cotton arrivals crossing the 5 million bales mark on October 1, 2023, is a momentous achievement for Pakistan. Final yr, our complete crop was 5 million bales, and this yr, we’re anticipating a bumper crop of 12 million bales. This exceptional progress showcases the dedication and arduous work of our farmers and the resilience of our cotton business. The Ministry of Commerce stays dedicated to supporting and selling the cotton sector in Pakistan, recognizing its indispensable position within the nation’s financial improvement and international competitiveness.”

Why this can be an anomaly

This yr’s luck doesn’t clear up the bigger situation. Years when issues fall in place will come and go. A equally good yr had additionally come again in 2021-22. Again then the cotton crop that was sown in Pakistan in 2021 and was harvested in 2022 benefited from a peculiarity of worldwide commerce attributable to Covid-19 that resulted in a bumper crop of cotton. 

When the pandemic hit, the whole lot modified and the native business discovered that importing cotton was not an choice. Worldwide cotton costs (in rupee phrases) over the past yr have gone up by virtually 30% — from PKR 12,606 on July 1, 2021, to PKR 18,259 by mid-February this yr. The ever-dwindling worth of the rupee not solely doubled the influence of import for Pakistani millers but additionally made it subsequent to unimaginable to calculate the ultimate value of manufacturing, rendering import commercially non-feasible for the business.

Equally this yr it was the falling fortunes of US cotton that helped Pakistan’s cotton growers. The truth is that cotton has total seen a critical decline within the nation. The story of cotton in Pakistan has been that of a possibility squandered. Between 2005 and 2020, Pakistan’s manufacturing of cotton declined by almost 35%, from almost 14 million bales in 2005 to only over 9 million bales in 2020.It additional fell to five.6 million bales in 2021, earlier than making a short restoration at 7.7 million bales in 2022, and has now fallen to a paltry 4.9 million bales in 2023. This marks an total decline of 65% up to now 18 years.

The information speaks for itself. Zoom in to cotton manufacturing over the previous few years and it’s a sordid story. As just lately as 2017, Pakistan’s cotton manufacturing was excessive, clocking in at over 10 million bales for the yr. The output really rose by one million bales to 11 million in 2018, earlier than settling once more at simply over 9 million bales in 2019. The following two years noticed a decline. In 2020, solely 8 million bales had been recorded earlier than a pointy fall to five.6 million bales in 2021.

Because the core problems with the cotton crop stay unaddressed, farmers will proceed to desert this crop and as an alternative develop richer merchandise akin to sugarcane that are brief time period money crops however dangerous for agriculture and the local weather within the long-run.

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FBR freezes PIA’s financial institution accounts over Rs55bn unpaid federal excise responsibility



The Federal Board of Income (FBR) has taken motion to freeze all financial institution accounts of Pakistan Worldwide Airways (PIA) attributable to non-payment of federal excise responsibility, including to the airline’s ongoing monetary challenges.

FBR officers report that PIA’s excellent liabilities for federal excise responsibility have reached Rs55 billion as much as September 2023. Regardless of repeated notices, the airline has failed to handle these obligations. Moreover, the tax liabilities for October 2023 stay unresolved as tax returns for that month are but to be filed.

The Massive Taxpayers Unit (LTU) in Karachi, a subsidiary of FBR, executed the freezing of PIA’s accounts with the purpose of recovering the excellent tax liabilities. Already, an quantity of Rs1.5 billion has been recovered and deposited into the nationwide treasury. Banks have been instructed to promptly switch any funds obtained in PIA’s accounts to the FBR’s treasury accounts.

Latest reviews point out that PIA has not filed returns since February, and a tribunal’s order requires the airline to promptly pay Rs2.77 billion. The freezing of accounts occurred two days earlier than the top of the month, deviating from the same old follow of such actions happening on the month’s final day.

It’s pertinent to say right here that final month, PIA confronted operational disruptions, together with flight cancellations and delays, attributable to unpaid dues to the state’s oil advertising firm, Pakistan State Oil (PSO). Studies from Bloomberg spotlight that PIA’s liabilities stand at Rs743 billion (roughly $2.5 billion), surpassing its complete property by 5 instances.

PIA sought extra borrowing of over Rs7 billion from banks amid considerations about potential flight operation suspensions amidst a extreme monetary disaster. The airline has approached the Aviation Division for quick loans, together with a government-guaranteed possibility for securing Rs7.5 billion.

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Pakistan’s cotton exports see a big rise this season, transport 125,000 bales



Pakistan has efficiently exported a minimal of 125,000 cotton bales, with prospects indicating additional enchancment in export volumes.

Notably, all export offers have been secured by a singular cotton ginner from Sindh, Dr. Jasso Mal, with locations together with China, Vietnam, and Indonesia.

It’s anticipated {that a} comparable amount of cotton bales shall be exported within the remaining length of the season. The present season marks a possible document, contemplating that cotton exports haven’t surpassed six digits since 2017-18 when the determine reached 207,424 bales. In distinction, the nation exported solely 4,900 bales in 2022-23, 16,000 bales in 2021-22, and 70,200 bales in 2020-21.

Ginners attribute this upswing in exports to the superior high quality of lint and favorable worldwide markets, drawing international consumers to Pakistani cotton.

Based on Cotton Ginners Discussion board Chairman Ihsanul Haq, the absence of typical rains in most cotton-growing areas has positively influenced crop high quality. Moreover, a big issue has been the document devaluation of the rupee, making native cotton extra aggressive on the worldwide stage.

Haq acknowledges that the potential document in cotton exports may need been greater if not for a decline in lint yield in Punjab on account of a extreme whitefly assault. Environmental air pollution has additionally negatively impacted the business.

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Senate committee sad with SBP’s probe into Rs70bn photo voltaic panel rip-off



The Senate Standing Committee on Finance expressed its dissatisfaction with the State Financial institution of Pakistan (SBP) over its dealing with of the investigation into the trade-based cash laundering of over Rs70 billion by way of the import of photo voltaic panels.

The committee, chaired by Senator Saleem Mandviwalla, met on Wednesday to debate the problem for the third time, however discovered the newest report by the SBP to be insufficient and missing in new data or progress.

The committee members questioned why the SBP was not sharing the total particulars of the case, when the Federal Board of Income (FBR) had already established the proof of cash laundering by way of the duty-free imports of photo voltaic panels.

A consultant of the SBP advised the committee that the banks concerned within the case had been recognized and penalised, however didn’t disclose their names.

The committee members, together with PMLN’s Musadik Malik and Saadia Abbasi and PTI’s Mohsin Aziz, demanded that the SBP present the entire data and the names of the banks to the Senate panel.

Senators additionally identified that the cash laundering was a critical offence, particularly at a time when the nation was going through international change constraints and needed to limit important imports.

Mandviwalla mentioned he had been suggesting that the case ought to be referred to the Federal Investigation Company (FIA) for a radical probe, because the SBP was not giving a transparent image to the committee.

PMLN’s Malik mentioned the FBR and Customs authorities had revealed that 63 importers had laundered cash by way of over-invoicing of photo voltaic panels, however this was primarily based on an audit of solely 200 out of 450 importers. He mentioned the whole sum of money laundering could possibly be as excessive as $2.5 billion if all of the importers had been audited.

Customs officers reiterated their earlier stance that they’d began the investigation in October 2022 and located 63 importers concerned in over-invoicing of photo voltaic panels, which had been imported from China however funds had been routed to the UAE or Singapore. They mentioned the photo voltaic panels weren’t bodily examined by the customs as they had been duty-free objects and solely good declarations (GDs) had been introduced to the customs desks.

The FBR had reported that photo voltaic panels had emerged as a high-risk merchandise for over-invoicing and trade-based cash laundering as a consequence of their duty-free import standing and the absence of gross sales tax on native provide.

They mentioned the photo voltaic panels, which had been imported at Rs72.83 billion, had been bought within the home market at nearly half the value, i.e. Rs45.61 billion.

Customs officers mentioned they’d registered instances in opposition to the most important suspects, together with Rab Nawaz and his spouse of Shiny Star Firm, who had been now on bail. Senator Mohsin Aziz mentioned the Shiny Star had laundered round Rs40 billion by way of two banks.

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