Liquidity shortage is also hurting other sectors of economy like cotton as its price has declined by 42 percent during the last one month due to slow buying by mills in the wake of high interest rates and liquidity shortage, they said. They said that at present thousands of tons of phutti has been picked and was lying in the fields of Sindh and Punjab. However, on Saturday in a sudden decision the ginners decided not to procure more phutti from growers due to insufficient funds.
In addition, the ginners have also decided not to sell the ready cotton lying in the ginning factories to the millers or other buyers till stability in cotton prices in the market, sources said.
Ginners said that banks were not providing financing for buying cotton, which resulted in slow buying which pushed the price downward compelling the ginners to stop buying phutti and selling cotton. "We are going to close the ginning factories from October 30, 2008, if the government did not take any action on our request, and banks did not start fresh financing for cotton buying," they said.
They said: "Raw cotton prices have been slashed by 42 percent during last one month due to liquidity shortage and slow buying of cotton in the peak ginning season." Cotton prices stood at Rs 4200-4300 per maund in September whereas on October 25 they have come down to Rs 2500-2600 per maund in the local market, ginners said.
They said that some 325 factories in Sindh and 900 in Punjab have 100 percent stopped buying/selling operation and will not resume till the government solves these problems. Ginners said that rising power and interest rates had increased the cost of production.
A delegation of Pakistan Cotton Ginners Association, led by chairman Muhammad Akram met Shaukat Tarin, advisor to PM at FPCCI, who assured them that TCP will intervene in the market to purchase cotton from the ginners to stabilise prices.