This document discusses various cotton support mechanisms for Pakistani farmers, including: 1. Providing price support through government procurement of cotton at an intervention price to protect farmers from low market prices. 2. Providing direct cash assistance to farmers when market prices fall below the cost of production. 3. Procuring seed cotton from farmers and ginning it into lint, then selling the lint to stabilize domestic cotton prices. 4. Implementing supplementary measures like banning cotton imports during harvest season and providing crop insurance for small farmers.

1. khalidabdullah99@yahoo.com
Cotton Support
Mechanism

2. Why Procurement
Cost of production is too high than market price.
Liquidity issues, less buying by the industry
International Slumps
Cartel by the industry/ traders to lower market prices
Any other reason…

3. Time
Intervention price must be announced by March (
before start of cotton sowing)
Price protection is a great tool to bring more
area under cotton crop.

4. Support measures
 Reduce cost of input
 Timely access to accurate data
 Well informed growers about market trends
 Bargaining power, quality information
 Adjustments in import and export
 Access to new technology and farm credit
 Policy of other crops and their market

5. Procurement through TCP
1. MinTex moves summary to ECC for approval of procurement
2. API determines the seed cotton price.
3. TCP calculates the lint price
4. TCP invest tender for agents/ supplier
5. PCSI-TCP inspect the lots and complete buying process
6. The procured cotton shifted to TCP godowns
7. TCP get permission from ECC to sell that cotton

6. Pros Cons
Easy to adapt Grower is not very likely to get
benefit
Institutional experience Industry gets expensive raw ma
terial
No huge infrastructure requires Standardization/ inspection iss
ues
Easy to dispose off

7. Direct Assistance
1. MinTex moves summary to ECC for approval direct assistance
2. API/ MinTex calculate the appropriate assistance
3. Provinces disburse the funds.
4. Local administration monitor the process

8. Pros Cons
Easy to adapt Grower is likely to get benefit
Institutional experience Industry does not hurt for high
er prices of raw material
No huge infrastructure requires No issue of standardization etc.

9. Procurement of Seed Cotton
1. TD will move summary for procurement
2. TCP/ Provinces identify/ register potential ginning factories
3. TCP/ Agri Deptt/ PCSI staff deputed on each ginning factory
4. Seed cotton is procured on intervention price based on grade
5. TCP procure lint from these ginning factories equivalent to
seed cotton procured during intervention period
6. Intervention stopped when market stabilizes
7. TCP sell cotton in local or international market

10. Procurement of Seed Cotton
Purchase of Seed Cotton at Intervention Pri
ce
Ginneries will purc
hase Seed Cotton
At Rs 3000+
Quantity Mon
itoring By TC
P
Quality Monit
oring By PCSI
TCP will Purchase Lint fro
m Ginners equivalent to
Seed Cotton at Bench M
ark Price
TCP will sell Lint
to Spinners

11. Pros Cons
Not very sasy to adapt Grower is very likely to get ben
efit
No institutional experience Industry does hurt for higher pr
ices of raw material
No huge infrastructure requires Standardization issues etc.
Human Resources constraints

12. Other supplementary measures
 Cotton harvesting period is very crucial for setting the pri
ces of cotton.
 The industry continues to import even at the time of harv
est and arrival of new crop which suppress the cotton pri
ces and results in losses to the farmers.
 It is therefore, proposed that there should be complete b
an on import of raw cotton and yarn at the time of harve
st of cotton crop and arrival of new crop from the month
of September to December.
 This will help in stabilizing the domestic cotton prices.

13. Crop Insurance
 Cotton crop badly suffered due to heavy and prolonged rai
ns, high temperatures (sunscald / leaf burning) and onslaugh
t of insect pests and diseases.
 Small farmers are the main victim for such vagaries.
 Small farmers having less than 5 acres have limited access
to agricultural credit and other government schemes.
The government may consider launching of specified Cotto
n Crop Insurance Scheme through National Banks, State Bank
, Zarai Tarqiati Bank, Commercial Banks, Post Offices.
The inspection of cotton crop may be made with the assist
ance of Agriculture Extension and Land Revenue Officers of t
he specific area and estimate of cotton crop losses due to ins
ect pests/disease, environmental or other unavoidable elem
ents and payment may be made accordingly.

14. Hedge Trading

15. Other Interventions
 Strict regulation on establishment, increase in capacity or
shifting of sugar mills in/to cotton growing area.
 The trend of installation of sugar mills increased from 56
(1995-96) to 84 (2015-16) which must be checked to save
precious resources of irrigation water and cultivating the
cotton crop, being highly value-added crop.
 Introduction of advanced technology in seed will help in i
ncrease production per unit area and increase profitabilit
y.
 Generous funding for cotton research programs
 Increased investment in extension services

16. Thank you