Pakistani Ginners Lobbying for Higher Prices

By Jim.Robinson|December 29, 2011

It would be perfectly understandable for cotton ginners and growers to seek higher prices for the fruits of their labor. After all, who wouldn’t be happier with a higher income for the same amount of work? At face value, the fact that cotton professionals (primarily ginners) in Pakistan are asking for higher prices is something to be expected. It will be interesting to see if they get their wish, especially since one of the primary justifications they have offered doesn’t seem to make sense.

Ginners say that falling domestic and international prices will do great damage to growers, perhaps even threaten their livelihoods. However, the vast majority of the country’s cotton – 11 million of the expected crop of 12.5 million bales, representing nearly 90% of this season’s total production – has already been sent to the domestic market. As a result, a price increase now would offer very little in the way of improved incomes for the nation’s farmers.

On Dec. 28, representatives of Pakistan’s ginning industry met with leaders from the Trading Corp. of Pakistan (TCP), asking that the government’s principal trading arm buy the 10 million bales of cotton produced so far at a price of about 80 U.S. cents/lb. Even after a recent rally, the current price remains just below 70 cents/lb, so the requested price increase is not insignificant.

Two of the top cotton associations in the country – The Karachi Cotton Association and the All Pakistan Textile Mills Association – have argued against any government interference in cotton prices, preferring to let the natural laws of supply and demand determine the appropriate price.

Sources appear to believe that the ultimate result will be a compromise, with some type of action taken by the government to increase prices – but most don’t believe ginners will get the full increase they’ve requested.