BR Research | 5 Dec
Despite being the fourth largest cotton producing country in the world, Pakistan’s cotton crop has continued to show dismal performance over the years. Naturally then, the reliance on imported cotton has increased with exporters and manufacturers reliant on imports to feed their mills.
However even importing cotton has been a pain due to the imposition of both tariff and non-tariff barriers which stakeholders blame on the prevalence of lobbies across the upstream value chain. A classic case in example is the large number of stuck shipments of imported cotton at the port.
These shipments, stuck for more than a couple of months cannot be cleared because of lack of availability of methyl bromide which is a chemical used for fumigation purposes. As a result imported cotton shipments have been incurring demurrages while the local industry is facing difficulties in meeting order deadlines. According to the All Pakistan Textile Mills Association (APTMA) methyl bromide is unable to be imported due to non-issuance of a no-objection certificate (NOC) by the Ministry of Climate Change (MCC) and the Ministry of National Food Security (MNFS).
Upon talking to ministry officials, it seems the holdup was due to the delay on the part of the Ministry of Climate Change which delayed issuance of NOC because methyl bromide is in the list of ozone depleting substances (ODS) and its import was increasing.
However, this reason seems unwarranted given that the guidelines for import of ODS allow import of methyl bromide for quarantine and pre-shipment purposes with the permission of Plant Protection Department (PPD) which comes under the MNFS. If the PPD has given permission, there should be no reason for delaying imports of methyl bromide especially when it is resulting in stuck imported cotton shipments on the port.
Sources within the textile industry say the ginner’s lobby has the most to gain from the imposition of these self-imposed non-tariff barriers while downstream players get hurt as there in no choice left for local manufacturers but to rely on more expensive local cotton which is sold on parity with international rates but is of inferior quality.
As the volume of imported cotton rises due to more consumption and less local production, the import of methyl bromide will also naturally rise. The concerned ministries should be more facilitative especially in the case where the ultimate impact is to be borne by the textile industry. An industry which the government has pinned its hopes on improving the country’s exports.
(Source: Business Recorder)