Yarn Shortage Affecting Textile Sector of Pakistan

ISLAMABAD — As the government has failed to resolve the yarn crisis, some 30 per cent work of the textile sector has been affected and majority of the textile units had close down due to the unavailability of the yarn from last few weeks, TheNation has learnt on Friday

According to the sources, unavailability of yarn even at the higher prices is getting serious with the passage of every day and majority of the industries in Faisalabad and Jhang and other countries had left the working. If the current crises remain for next few weeks’ country would not available to fulfill its export targets, the sources added.

It is worth mentioning here that in the ongoing year production of cotton in the international market is not sufficient and countries like China are importing it from Pakistan, which is considered one of the main reason for the yarn shortage in the country.

The sources further said that every year Pakistan exports about 25 per cent of the yarn to the other countries, while this year the export expected to be 30 per cent, which could create problems for the local industries.

Meanwhile, different associations of the textile industry believed that exporting yarn is the reason for the unavailability and they are demanding of the government to impose ban on the export of yarn in order to provide commodity to the local consumers. Small Power Looms Association already threaten to observe countrywide strike in the month of December if government did not impose ban on the export of yarn.

However, the government is totally failed to solve the said crisis as neither the talks, between the Minister of Textile Industry with all stakeholders, proved any good nor the Cabinet Committee on Textile found any solution to the problem. The cabinet committee on textile met under the chair of Federal Minister for Finance Shaukat Tarin few days back but did not announce any strategy regarding availability of yarn in the country.

The sources further said that if the government did not come with some strategy in next few weeks Pakistan would deprive of the textile orders of EU and USA that would further affect the growth of the textile sector.

Similarly, the yarn shortage emerged because of the black-marketing and storage of yarn in order to increase the prices. Domestic cotton prices have already surged by 25 per cent since the start of the current fiscal year. Neither the provincial governments nor the federal government took any action against those responsible for the blackmarketing

Federal Minister for Textile Industry Rana Farooq Saeed Khan said once that action would be taken against the hoarding and black marketing but despite passing of two weeks no step is taken.

Analysts and exporters anticipate further rise in the domestic cotton prices because of active buying by the international buyers who have flocked Pakistan amid a shortfall in world cotton production.

Source: PRGMEA

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Ban on export of cotton, thread demanded

Chairman All Pakistan Bed Sheet and Upholstery Manufacturers Association (APBUMA), Khawaja Muhammad Anees, has urged government to impose a ban on export of cotton and thread in order to ensure the maximum export of value added products and to earn reserves for the country.

Khawaja Anees said that increasing ratio of cotton export from the country has become a sign of threat for the local textile and spinning sector. Decline in cotton production target and the increase of thread export from the country has become the cause for the non-availability of crude material for local textile and power looms sector. Textile export has fallen due to export of cotton and thread. It is difficult to meet the export orders in future, he added.

He said that government had fixed the export targets in the trade and textile policy, however, due to low production during the current season. The price of cotton in the local market is increasing because of rising exports. He urged government to put ban on the export of thread and cotton so that the export orders of bed sheet, upholstery and other items could be delivered on time.

It is worth mentioning here that spinning mills have stopped the sale of thread in the local market, which is badly affecting the garments, power looms, hosiery and textile sector. The export of thread has increased after the dollar gains value. Exporters are minting record profit with the export of thread. However local industries are severely affecting with this trend.

News Source: PRGMEA

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Pakistan - Unplanned export of raw cotton, yarn hurting apparel sector

Unrestricted export of cotton and cotton yarn has been creating serious problems for the apparel sector, whose exports are falling because of this issue.

The constant export of cotton and cotton yarn has pushed up their prices to new heights, ultimately increasing the cost of production of apparel sector, according to representatives of apparel sector.

Jawed Bilwani, Chairman, Pakistan Apparel Forum; Rana Muhammad Mushtaq khan, Central Chairman, Pakistan Hosiery Manufacturers Association (PHMA) and others said that unrestricted export of cotton yarn would have a serious effect on the exports of the value added apparels making it difficult to achieve our ambitious export target. The irony is that the cotton yarn is being exported to our competing countries, which is tantamount to arming them for competing in the finished product market. Value added apparel sector is converting raw cotton of 67 cent a pound into value added finished goods worth $5 to $6 a piece, earning valuable foreign exchange for the country.

Exports of raw cotton and semi-finished textiles have increased considerably in recent times, which is indeed alarming: Raw cotton exports were up 40 percent in FY08, 25 percent in FY09 and overall 20 percent from 2006 to 2009.

The month of May 09 alone registered an increase of 31 percent over the previous month, while June 09 registered increase of 117 percent over May. In the case of cotton yarn, exports increased by 4 percent in May 09, and by 14 percent in June 09. On the other hand, at the closing of financial year 2008-09, an unacceptable drop in exports was registered in major value added sectors, i.e., Knitwear -8 percent, Bedwear -10 percent, and Readymade Garments -4 percent, while exports of cotton increased by 25 percent while that of Yarn increased by 15 percent.

On the other hand, prices of different qualities combed and carded cotton yarn increased 24 percent to 33 percent in the last three months.

With the above rise in price of cotton yarn the cost of production of garments goes up by 10 percent. One can imagine the effect of this increase of 10 percent in these most crucial times with stiff competition form neighbouring and other competing countries, when the margin of profit of value added exporter of garment here is a mere 5 percent to 6 percent. “How can the exporter survive and exist under such circumstances,” they questioned.

India as well as China, main competitors of Pakistan, also export cotton and cotton yarn but they give regard to the requirement of the value added textile exporters and export only after determining the size of the crop and the exportable surplus, ensuring that the requirements of their value added textile exporters are properly met.

They said that our value added apparel sector is reeling under immense pressure of high costs of doing business, rising utility rates and several other problems. Further, this unrestricted export of major raw material, cotton and cotton yarn, has led to spiraling prices and is crucifying our exports of value added apparel which will lead to further closures of large number of export oriented units.

The EU and US—major importers of local textiles—are still trying to grapple with the deep-rooted economic problems. The IMF has predicted that GDP growth in the EU and US would remain flat in the current year.

Domestically, the power crisis, gas load shedding, high financing cost, other infrastructure problems and above all the deteriorated security situation caused a big dent in textile exports.

News Source: Daily Times

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