THE KARACHI COTTON ASSOCIATION (The Cotton Exchange, I.I. Chundrigar Road, Karachi.)

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1 THE KARACHI COTTON ASSOCIATION (The Cotton Exchange, I.I. Chundrigar Road, Karachi.) THREE YEARS PLAN OF ACTIVITIES OF THE KCA INTRODUCTION The Karachi Cotton Association set-up in 1933 to establish just and equitable principles for the Cotton Trade is the premier body of the Cotton Trade in the country. It provides all necessary facilities for domestic and export trading of cotton and advice to the Government on the matters relating to formulation of Cotton Policy in the best interest of the Cotton Trade and the economy. Since its establishment in 1933, the Karachi Cotton Association has been representing all segments of the Cotton Trade including the cotton Growers, Ginners, Textile Mills, Exporters and Commission Houses in Pakistan and safeguarding their interest at all level in order to ensure smooth flow of marketing of cotton domestic and international level. POLICY OF FREE TRADING IN COTTON: The Government has been following the policy of free trading in cotton i.e. free export and import of cotton without any duty and quantitative or qualitative restrictions for the past several years. This policy has been designed to safeguard the interests of all segments of the cotton trade. The KCA would emphasize upon the Government to continue with the same policy without any change or modification in the coming years to safeguard the interests of all segments of the cotton trade. URGENT NEED FOR INCREASING COTTON PRODUCTION Due to decline in cotton production for the past several years, Pakistan has become a nett importing country in the world and the local textile industry are meeting their requirement of cotton through import of cotton. In order to return to the previous status of exporting country, it is necessary for the stakeholders to take concrete and effective measures in all directions to increase production of cotton in the coming years to meet the rising requirements of the local textile industry as well to ensure presence of Pakistan Cotton in the international market. The Karachi Cotton Association would continue to take-up the matter with all the stakeholders and the Government to evolve ways & means to increase production of cotton by increasing yield per acre at the first stage and bring more area under cotton cultivation. The KCA would also approach the Government to gear-up all the Cotton Research Institutes and other related Research Organizations to evolve virus resistance cotton seed varieties for cultivation and ensure fool proof arrangements for producing and distribution of certified Genetically.Modified Cotton Seed to the growers with a view to increase production of cotton. The KCA would also urge the Government to make necessary arrangements to import pure and certified pesticides in small packing instead of Bulk to prevent adulteration by the unscrupulous local traders. Contd. on page/2

2 -: 2 :- To achieve increased production, the KCA would advise all the stakeholders to switch-over to modern farming and ginning practices and integrated pest management system year after year to achieve desired results. In prevailing situation, the production of cotton would not be able to cope-up with the domestic and export requirements unless the above measures are not adopted in true sprit. The KCA, therefore, would urged the Government to take all necessary measures by mobilization of all resources at Federal and Provincial levels to increase production of cotton in the coming years. NEED FOR IMPROVEMENT IN QUALITY COTTON PRODUCTION: i) GRADE OF COTTON: It is generally realized that future gains in cotton production in the country are expected through qualitative improvement of seeds. Pakistan s cotton and yarn are yet to be rated better in the international market. The reasons for discounted price for our raw cotton and yarn in the world market are primarily due to the absence of quality based marketing system and the presence of non-lint contents. Pakistan cotton is hand picked and contains quite a large quantity of non-lint contents. The contamination of leaf, trash, burs, pieces of cotton sticks and grasses, etc., takes place at field level during picking. The KCA would take-up with the Government to make necessary arrangements for proper education and motivation of farmers to pick clean cotton from the fields and to provide reasonable incentive of premium to the grower and ginner to produce contamination free cotton. ii) QUALITY OF COTTON Pakistan cotton is under-rated due to bad picking and ginning and also due to lack of proper marketing system in the country. The KCA, as in the past, would approach the Government to take following measures to upgrade the status of raw cotton and stream line the marketing system in the country:- 1. Implementation of Cotton Standardization Ordinance Fixation of price of seed cotton on Grade basis. 3. Implementation of contamination free cotton production programs. 4. Establishment of HVI equipped Fiber Testing Laboratories in major cotton growing areas. 5. Grading & Classification services at ginnery level. 6. Establishment of Private Inspection companies to provide services of Grading & Classification. 7. Ginneries to upgrade their ginning technology & capacity. Contd. on page/3

3 -: 3 :- NEED TO PRODUCE CONTAMINATION FREE COTTON : Pakistan cotton is renowned in the international market for its strength, maturity, uniformity and its good spinning value. However, contamination of cotton is a serious problem which affects the quality of our cotton and cotton products. The prices in the international market, due to contamination are low that causes loss to exchange earnings. In the absence of proper grading system in the ginning factories, production of properly cleaned cotton has become impossible The KCA would, therefore, urge upon the Government to launch a comprehensive program for producing contamination free cotton in the Punjab and Sindh in order to get desired results. RUNNING OF SEED PLANT OF SINDH SEED CORPORATION AT SAKRAND, SINDH. It is a matter is of grave concern that the fully imported Cotton Seed Plant at Sakrand is lying idle for the last 11 years. Due to the closure of the Plant referred to above, the growers of Sindh have not been getting Certified Seed for cultivation of Cotton Crop. They have been compelled to meet their requirements of Seed from unscrupulous suppliers of Seed at the time of sowing. Despite repeated requests by the growers, the Plant could not be made operational hence Certified Seed could not be supplied to the growers in Sindh. The cotton is the backbone of the country s economy and due to grave negligence of concerned authorities, Pakistan has emerged as the nett cotton importing country. On account of better Seed management, India s Crop has grown manifold in the last decade. The KCA would urge upon the Government to activate the Plant of Sindh Seed Corporation at Sakrand, Sindh on priority basis in order to supply certified Seed to the growers of Sindh with a view to increase production of cotton for domestic consumption as well as exports. RESUMPTION OF HEDGE TRADING IN COTTON: Hedge Trading in cotton is a special segment of trade. The KCA used to perform Hedge Trading in Cotton since Following the nationalization of export trade and establishment of the Cotton Export Corporation of Pakistan in the Public Sector, the Hedge Trading in cotton was suspended by an administrative order of the Government of Pakistan in Since than, the KCA has been urging upon the Government to accord necessary approval to resume Hedge Trading in cotton under the aegis of the KCA as it is well equipped to resume Hedge Trading in cotton As per the reports published in the Section of press, the Cabinet, in their meeting held on has, in principle, agreed to accord approval to regulate Cotton Hedge Trading to the Ministry of Commerce under the provisions of the Cotton Act, In view of its significance and utility in marketing of cotton, the KCA would continue urge the Government to allow resumption of Hedge Trading in Cotton by The KCA for the proper conduct of national and international trade in cotton and for efficient marketing of cotton crop in Pakistan. Contd. on page/4

4 -: 4 :- TO ALLOW EXPORTS OF COTTON BY THE MEMBERS OF THE KCA ONLY The cotton trade is a sophisticated business and requires expertise and skill on the part of Buyers and Sellers. In case of exports by unregistered traders complaints from the Buyers on non-fulfillment of contractual obligation are being received in Pakistan which brings disrepute for the country. The members of the KCA while exporting cotton observe By-Laws, Rules and Regulations of the KCA to maintain sanctity of contract. These contracts are based on ICA Rules and claims, if any are settled by them. In view of the above, the KCA would strongly urge the Government to make it mandatory for the exporters of raw cotton that they are invariably registered as member with the KCA. REDUCTION IN COTTON CESS The Cotton Cess was increased from Rs /- to Rs /- per bale of 170 kgs. w.e.f in order meet the administrative and development expenditure of the Pakistan Central Cotton Committee. Due to exorbitant increase of about 80% in Cotton Cess and general increase in incidentals, the competitiveness of Textile Industry and Export of Raw Cotton has adversely effected. The KCA would strongly urge the Government to abolish Cotton Cess in order to facilitate the Textile Industry and Export Trade for the sake of economy of Pakistan. ABOLITION OF WITHHOLDING TAX ON EXPORT OF RAW COTTON Withholding Tax on supply of raw cotton has been reduced to 1% from 1.5% at the ginning stage. Previously withholding tax on ginning and exports of raw cotton were same. The KCA would urge the Government to abolish withholding tax of 1% on export of raw cotton to make the exports of raw cotton competitive. LOCAL SALE/PURCHASE CONTRACT OF COTTON (FAIR TRADE PRACTICE) In order to settle disputes between the buyer and the seller and ensure efficient marketing of the cotton crop, there is a dire need to introduce a Local Sale/Purchase Contract of Cotton between the Seller and Buyer. The KCA would continue to make its efforts to introduce Sale/Purchase Contract domestically for all Cotton transactions in consultation with all stakeholders of the cotton trade i.e. The PCGA, the APTMA and the KCA. ARBITRATION The By-Laws of the KCA cover comprehensively the entire field of cotton trade and provide arbitration facility in case of dispute arising between the Seller and the Buyer. In order to facilitate the members of the Association, the KCA would like to extend Arbitration facility to resolve the disputes, if any, between the Seller and the Buyer.

5 -: 5 :- ACHIEVEMENTS On the recommendation by the KCA, the Government, in the Trade Policy for the year has announced the Policy of Free Trading in Cotton and Import/Export of Cotton without any Duty and quantitative or qualitative restrictions to safeguard the interests of all segments of the Cotton Trade including the Growers to encourage them to grow more cotton to meet the rising requirements of the local textile industry and ensure presence of Pakistan Cotton in the International Market through exports. In order to increase production of cotton, the KCA had time and again taken-up the matter with the Government to gear-up all the Research Institutes and other related Research Organizations to evolve virus resistant Cotton Seed varieties for cultivation and ensure foolproof arrangements for producing and distribution of certified genetically modified Cotton Seed to the Growers. It is reported that the Government has recently signed a MOU with M/s. Mansanto Pakistan Agritech (Pvt.) Limited for producing and distribution of Certified BT Seed to the Growers with a view to increase cotton production in the coming years. It is hoped that the approved BT Seed would be available to the Growers for cultivation in February The KCA has always recommended to the Government to improve quality of cotton in order to fetch better prices for Pakistan Cotton in the International market. The Ministry of Textile Industry, Government of Pakistan, Islamabad with the collaboration of the PCGA has made a plan to send a delegation comprising of members of the PCGA and the KCA to the different Cotton Producing Countries i.e. USA, Australia, India, China and Turkey etc. to study the cotton cultivation and ginning practices being adopted by those countries. Karachi: *~*~*~*~*~*~*~*~*~*~*~*~*~*~*~