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Thursday, August 23, 2007

Mealybug threat may force import of Indian cotton

ISLAMABAD, Aug 19: The government is likely to allow subsidised import of middle staple cotton from India by land if the mealybug attack is not controlled in two to three weeks.

Informed sources said the mealybug attack was widespread and the government was finding it difficult to import the required pesticides in sufficient quantities owing to shortage in the international market.

“If we are unable to get the pesticides in about three weeks’ time, we may miss the cotton production target by 2 to 3 million bales,” a senior official told Dawn. The official said the Ministry of Food and Agriculture was reviewing the situation almost on a daily basis to ensure that the pesticide requirement was met.

He, however, said the current crop situation was satisfactory and the target of 13.2 million bales was expected to be achieved or might even be surpassed. But, he added, the next two weeks were crucial and if the problem continued the production might go down by three million bales.

In case the virus was not controlled in two weeks, the official said, the government would have to consider subsidised import of second grade cotton from India to meet the needs of the textile industry which was already facing a shortage of about three million bales.

Sources in the industry said the All Pakistan Textile Mills Association had forwarded a formal request to the federal government to allow duty- and tax-free import of second grade cotton from India. They said the government had allowed duty- and tax-free import of long staple cotton from India but the step was of no help because long staple cotton was not available in the neighbouring country.

They said import of middle staple cotton through Bandar Abbas, Iran, and Dubai was continuing through normal channels on normal tax and duty rates.

If the cotton production targets are not met in the event of non-availability of mealybug pesticides, there will be no option but to allow duty- and tax-free import of cotton from India. But by that time prices may rise, neutralising the savings from tax and duty exemptions.

The government has targeted textile exports in the range of $15-16 billion this year, against last year’s just over $12 billion.

A part of about four million bales of surplus Uzbek cotton, which is lying at Iran’s Bandar Abbas port, is currently being imported by the private sector. Recently, about 50,000 bales or 8,000 tons of middle staple cotton was imported by the private sector.

The textile industry at present is under-utilised to the extent of 30 per cent. Before the mealybug attack, the government had set a target of producing 13.2 million bales which can drop to 10-11 million bales if pesticide availability is not ensured in the next few days. Pakistan’s total cotton consumption is around 16 million bales.

Pakistan is exporting about $1.5 billion cotton yarn which is not only strengthening its competitors but also resulting in low-cost exports. The share of textile exports in the country’s overall exports accounts for about 67 per cent and the government and the industry anticipate this reaching 80 per cent in a year or so. To achieve this target, the strategy is to diversify markets and focus on Central Asian Republics, Russia and Turkey.

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