Over 1200 ginning factories across the country have stopped buying phutti and selling cotton due to continued operational losses in the wake of declining price of cotton and liquidity shortage in the domestic market, industry sources said.

According to the last report while filing this news in PTJ, the ginners have also threatened to close the factories if the situation did not improve by October 30, 2008.

Liquidity shortage is also hurting other sectors of economy like cotton as its price has declined by 42% during the last one month due to slow buying by mills in the wake of high interest rates and liquidity shortage.

Ginners said that at present thousands of tons of phutti has been picked and was lying in the fields of Sindh and Punjab. However, 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. They said that some 325 factories in Sindh and 900 in Punjab have 100% stopped buying/selling operation and will not resume till the government solves these problems.