Trading Corporation of Pakistan (TCP) the state-run grain trader is facing difficulties in offloading cotton, procured on the federal government directives during the last season to support the farmers and stabilise its prices in the domestic market. TCP has conducted four tenders for the sale of 95,400 cotton bales (Crop Year 2014-15), of which, two tenders have been scrapped by the state-run grain trader as bids were lower than the reserve price. Some 10,800 cotton bales have been sold through remaining two tenders.

The fourth tender, opened on August 31, 2015 by TCP received poor response with only two parties participated and submitted five offers for procurement of 4,600 cotton bales against the offered quantity of 88,600 bales. The offered price for procurement of cotton ranged from Rs 4,860 per maund to Rs 5,180 per maund varying on the quality of the commodity.

As per the tender's terms and conditions, the offered price was linked with Karachi Cotton Association (KCA) spot rate and in order to facilitate the bidder on Sunday evening, the TCP also mentioned the reserve prices of all qualities on its website.

The reserve price for Super Grade 118" was fixed at Rs 5,165 per maund and the price for Grade-1/118" was set at Rs 5,065 per maund. M/s Tanveer Cotton Mill Lahore submitted a bid for procurement of 200 bales of Super Grade at Rs 5,180 per maund. It also submitted two offers for procurement of 3,800 cotton bales of Grade-1 at Rs 5,080 per maund. The second bid was submitted by M/s Nagra Spinning Mill, Faisalabad, which showed interest in procuring 200 Super Grade cotton bales at Rs 4,900 per maund and some 400 bales of Grade-1 at Rs 4,860 per maund.

The tender valuation committee and the award committee, comprising representatives of ministry of commerce, finance, textile industry and food security, met on September 1, 2015 in TCP head office Karachi to look into the offers and finally decided to accept three offers of Tanveer Cotton Mill for 4,000 cotton bales as its offers were slightly higher than the reserve price, set for this tender. The second bid was rejected as its offers were lower than reserve price.

In November last year, following the directives of the Economic Co-ordination Committee of the Cabinet, the state-run grain trader procured some 95,400 cotton bales from ginners at Rs 6,864 per maund, however presently it is compelled to offload these stocks at lower prices mainly due to lower price trend in domestic and international market. The federal government has already pledged to pay price differential in procurement and sale of the commodity.

TCP is likely to issues a fresh tender for the sale of remaining 84,600 cotton bales as any delay in the sale of the commodity will increase loss.