The document discusses setting an intervention price for cotton in Pakistan for the 2019-20 crop. It outlines meetings held between the Ministry of National Food Security and various stakeholders on developing a pricing mechanism. An import parity price formula was agreed upon, with the exception of APTMA. The National Assembly also passed a resolution to set a minimum support price to protect farmers. Based on average production and import/export data, an indicative price of Rs. 4000 per 40kg of seed cotton was recommended. A Price Review Committee was established to monitor prices and advise on interventions if needed.

1. INTERVENTION PRICE FOR
COTTON 2019-20 CROP
Ministry of National Food Security & Research
1

2. ECC Decision
(12-02-2019)
Directed Ministry of National Food Security &
Research to consult the Provincial Governments
on support pricing of cotton and share the
outcome of this exercise with ECC, for its
consideration.
2

3. Cotton Consultative Meetings
March 22, 2019 at Lahore: Setup a committee named as
Cotton Price Management Group to identify a pricing
mechanism in coherence with international cotton prices.
March 28, 2019 at Islamabad: Requested TID for Cotton
Hedge trading, Proposed to engage APTMA to devise a
formula to determine the Import Parity Price leading to
Price of Phutti.
April 23, 2019 at Islamabad: All agreed to have intervention
price based on Import parity price formula except APTMA.
July 15, 2019 Islamabad: Meeting with Advisor, requested
to withdraw summary and TID proposed purchase of Phutti
instead of Lint.
3

4. Resolution of National Assembly
30-04-2019 Islamabad
• “… and set minimum support price for cotton
to protect the local farmers and encourage
cotton cultivation in the country”.
4

5. Area (000 ha) under different crops in PUNJAB
Years Rice Maize Sugarcane Cotton
2005-06 1762.4 100.0 540.8 100.0 625.2 100.0 2426.0 100.0
2006-07 1728.4 98.07 492.5 91.07 711.8 113.85 2462.9 101.52
2007-08 1723.5 97.79 534.5 98.84 827.2 132.31 2424.8 99.95
2008-09 1977.7 112.22 534.4 98.82 666.5 106.61 2223.7 91.66
2009-10 1931.5 109.59 504.9 93.36 607.4 97.15 2435.8 100.40
2010-11 1766.8 100.25 543.6 100.52 672.2 107.52 2200.6 90.71
2011-12 1714.2 97.27 603.9 111.67 761.2 121.75 2533.7 104.44
2012-13 1711.4 97.11 587.7 108.67 767.7 122.79 2308.7 95.16
2013-14 1808.9 102.64 689.3 127.46 756.8 121.05 2199.0 90.64
2014-15 1877.7 106.54 558.8 103.32 710.6 113.6 2323.0 95.75
2015-16 1789.0 101.51 716.8 132.54 710.2 113.5 2243.0 92.46
2016-17 1701.0 96.51 596.0 110.2 792.0 126.7 1776.0 73.21
2017-18 1840.9 104.41 748.7 138.44 859.1 137.41 1947 80.26

6. Cotton Production, export and import
(million bales)
6
Year Production Export Import
2008-09 12.06 0.46 2.46
2009-10 12.70 0.92 2.01
2010-11 11.70 0.87 1.85
2011-12 13.6 1.51 1.01
2012-13 13.03 0.54 2.53
2013-14 12.77 0.67 1.57
2014-15 13.96 0.55 0.91
2015-16 9.92 0.29 2.45
2016-17 10.67 0.15 2.71
2017-18 11.93 0.21 3.59
2018-19 10.85 0.0745 2.439

7. Source: DMR, PCCC
4000
4500
5000
5500
6000
6500
7000
7500
8000
8500
2014 2015 2016 2017 2018
Cotlook KCA
7

8. Cotton Prices (cents/lb)
Month-Year A-Index KCA Difference
August,2018 94.78 84.25 10.53
September,2018 90.59 79.17 11.42
October,2018 86.72 77.46 9.26
November,2018 86.72 79.98 6.74
December,2018 86.34 76.61 9.73
January,2019 82.18 76.14 6.04
February,2019 81.16 75.28 5.88
March,2019 83.64 75.08 8.56
April 2019 87 72.00 15.00
May 2019 80 71.6 8.40
June 2019 79 71.5
7.50
July 2019 (2 weeks) 76 65 11.00
81 cent/lb= Rs. 132/mound

9. Operations/Activity/
Inputs
2018-19
(Punjab)
2019-20
(Punjab) %
2018-19
(Sindh)
2019-20
(Sindh)
%
Land preparation 6608.0 6851.1 9 6433.6 7031.0 9
Seed & sowing
operations
4944.0 5495.6 8 4370.0 5687.0 7
Irrigation 5079.7 5625.7 8 4293.1 4730.6 6
Inter-culture 2800.0 3042.4 4 3800.0 4300.0 5
Plant Protection 5100.0 5400.0 7 6000.0 7200.0 9
Fertilizers 9541.2 11882.6 16 11861.0 13694.7 17
Land rent 18000.0 20000.0 28 16666.7 20000.0 25
Payment to pickers 6600.0 8400.0 12 7600.0 10000.0 13
Other Costs 5409.4 5899.4 8 5680.3 6984.5 9
Net Cost of Cultivation 64082 72597 100 66704.7 79627.8 100
Yield (kgs) 880 840 1000 1000
Cost of Production
(Rs/40 kg)
2952.83 3496.99 2688.60 3204.3
AVERAGE FARMER COST OF PRODUCTION OF COTTON IN PUNJAB:
2018-19 AND 2019-20 CROPS

10. 10
Average cost of seed cotton (per 40 kg)
production in Punjab & Sindh; & Prices
Year Punjab Sindh
Avg Prices
(Seed Cotton)
2009-10 1450 1296 1800
2010-11 1720 1582 4050
2011-12 2208 1924 2400
2012-13 2479 2213 2600
2013-14 2593 2330 2950
2014-15 2901 2587 2450
2015-16 2936 2599 2300
2016-17 3058 2642 2950
2017-18 2967 2546 2996
2018-19 3198 2929 3795
2019-20 3496.99 3204.3
Current Cotton Prices Rs. 3400-3600 per mound in
Sindh and Punjab

11. Cost of cotton production (USD/kg of lint)
0.68
0.97 1.05 1.05
1.5
1.14
0.6
2.17
1.18
1.03
0.86
1.88
0
0.5
1
1.5
2
2.5
ICAC 2016
11

12. Import parity price
12

13. S.
No
Item
2018-19 2015-16 to
(Aug-Mar) 2017-18
Rupees per 40 kgs
1. Actual average cif ( Karachi ) price 10410 7588
2. Handling charges at port and transport cost from port to
textile mill at Karachi @ 5 % of cif price
521 379
3. Ex- gin price of cotton lint (Item 1+ item 2) 10931 7967
4. Value of 80 kgs of cotton seed (a) 2940 2940
5. Ginning charges for 120 kgs of seed cotton including
ginning losses
600 600
6. Value of 120 kgs of seed cotton (item 3 +item 4 - item 5) 13271 10307
7. Seed cotton price (item 6/ 3) 4424 3436
a) Average price of cotton seed for September 2018 to Feb 2019 in Multan, Bahawalpur, D.G. Khan and Rahim
Yar Khan markets was Rs 1470 per 40kgs.
Sources:
i) PBS, for cif ( Karachi price), ii) KCA, for incidental charges; iii) Pakistan Cotton Ginners Association, Karachi
for ginning charges; iv) Directorate of Agriculture (E&M), Punjab, Lahore.
IMPORT PARITY PRICE OF SEED COTTON ON THE BASIS OF ACTUAL AVERAGE CIF
( KARACHI ) PRICE OF IMPORTED COTTON
13

14. Indicative price for Seed Cotton
(Phutti)
Rs. 4000 /40 kg
14

15. Conditions
a) An indicative price of Rs. 4000/- per 40 kg for the base grade
3 with staple length 1⅓”, to be announced by the
Government of Pakistan. Its linkage with quality/grade is
also recommended. Pakistan Cotton Standard Institute (PCSI)
to be involved to ensure quality parameters.
b) A Price Review Committee under the chair of Advisor, M/o
Commerce & Textile to review the indicative price and other
measures to be taken in case of abnormal lows and highs in
the prices.
c) Composition of the Price Monitoring Committee and its TORs
are at Annex-IV.
d) Intervention by the TCP on the recommendation of Price
Monitoring Committee is also proposed.
15

16. Price Review Committee
1. Advisor, Ministry of Commerce & Textile Chair
2. Minister for M/o National Food Security and Research Member
3. Representative of M/o National Food Security & ResearchMember
4. Representative of Textile Division Member
5. Representative of Commerce Division Member
6. Nominated member of APTMA Member
7. Nominated member of PCGA Member
8. Nominated member of PKI Member
9. Nominated member of Sindh Abad Gar Board Member
10. Representative of Govt. of Punjab Member
11. Representative of Govt .of Sindh Member
12. Cotton Commissioner Member/Secretary
16

17. ToR of Price Review Committee
– Meet at weekly / fortnightly interval.
– Monitor cotton prices in the major representative
stations in Punjab and Sindh
– Direct the TCP to intervene when feels fit for
intervention and vice-versa
– Present a report to ECC periodically
– Any other
17

18. Thank You
Ministry of NFS&R
18

19. Seed cotton Price (40 kg) Rs. 4000
Quantity of Lint out of 40-kg seed cotton (33%) 13.33 kg
Quantity of Cotton Seed out of 40-kg seed cotton
(66%)
26.67 kg
Cotton Seed price (40 kg) Rs. 1400
Price of cotton seed for 26.67 kg Rs.933
Price of 13.33 kg Lint Rs 4000-933=3066
Price of Lint per kg 230
Price of one bale 170kg Rs. 230 x 170=39100
Add Incidental cost, Ginning charges services of TCP
etc
Rs. 43000
Cost of one million bales Rs. 43000 x 1000,000= Rs 43
billion