According to the Pakistan Cotton Ginners' Association (PCGA) report, Pakistan produced a total cotton crop of 11,349,029 million local weight (around average weight of 163 Kg a bale) bales ex-gin in 2008-09 season while last season it was 11,352,925 bales.
The ginners held unsold stocks of 549,997 bales, Trading Corporation of Pakistan (TCP) held 185,000 bales and exporters some 35,000 bales aggregating 769,997 bales as on 1st. May, 09. New crop (2009-10 season) may deliver first lot of cotton in Middle of June month from early sown areas of Central Punjab and then go on producing cotton bales.
However, early cotton sown areas of Lower Sindh may deliver fist lot of the new season by the end of June month and thereafter continue deliveries. The official production target for 2009-10 season has been fixed at 13.0 million 170-Kg bales. Since 2004-05 season when Pakistan accidentally produced a record high crop of 14.3 million bales against a lower target, we have been missing the production target by larger margins.
Apparently, there seems nothing new, which may help in achieving production target of 13.0 million bales next season. This analyst, therefore, estimate next crop around this season's level of production. Sowing process is going on widely on all cotton areas of Sindh and Punjab provinces while early sown cotton areas may deliver cotton in June month. For introducing Bt cottonseed, Pakistan has signed a Memorandum of Understanding with the Chinese government and the Chinese agriculture scientists have planned to sow Bt cotton on 800 hectares in Sindh and Punjab on experimental basis.
The plan also includes introduction of coloured cotton in Pakistan, which is not our requirement and we should only concentrate our efforts on production of white cotton.
This plan may take 3-4 years to produce Bt cotton commercially. Pakistan's annual requirements for cotton is around 155.5 - 16.0 million bales but due to the global depression Pakistan's cotton consumption may be decreased by 15 percent for one or two seasons. Even then our domestic cotton production may not meet our domestic cotton requirements and have to go for imports.
In 2007-08, Pakistan imported some 4.8 million 170-Kg bales securing second position in the world after China. In 2008-09, we produced 11.35 million bales and may require another 2.5 million 170-Kg bales from imports to meet its annual requirements. There are fears among the textile community that pending the effect of global recession, Pakistan's textile industry may not return to normalcy on account of deteriorating law and order, security and power shortage situations in the country.
The country is in the grip of uncertainty in respect of its security and integrity which has adversely affected its economic performance and living of the people. Pakistan's economic performance is deteriorating month to month mainly due to uncertain political conditions and escalating domestic War against terrorism. Pakistan's ten month (July - April, 09) performance paints a weak picture. Exports have decreased by 3.03 percent to US $14.762 billions from 15.220 billions same period last year. Imports stood at US $28.722 billions against 32.059 same period last year - decrease by 9.78 percent.
However, trade deficit stood at US $14.160 billions against 16.836 same period last year. During these 10-month period, home remittance reached US $6.35 billions and foreign investment slashed by 43 percent from last year. It is very unfortunate that share of textile exports dropped from 58.8 percent to 53.2 percent.
There is no doubt that the main driving force of our economy is the textile sector and its performance has been down graded on account of international factors such as global recession and internal factors such as power shortage, high interest rates, increasing operating cost and poor law and order situation.
Despite all odds, local cotton market stood firm to steady mainly on low availabilities of raw cotton in domestic market and some improvement in domestic and export markets of yarn and textile commodities. Lint prices soared to Rs 3,800 per maund ex-gin in sympathy with rising international cotton prices. Exports FOB Karachi prices are around 57-58 /lb for Types 1467 / 1503 but hardly any export business has been concluded at this level.
The TCP has no as yet finalised the accounts of the ginners who had sold some 185,000 bales to TCP at fixed rate of Rs 3,202 per maund and the PCGA has developed some dispute with TCP. The TCP should offer their cotton to local spinners at the market rate so as to stabilise domestic cotton prices. New York Cotton prices which crossed the level of 60 early last week have shed about 2 to 3 cents being under selling pressure.
Ruling contract of July, 09 finally closed at 56.30 and distant October,09 contract finished at 58.27. This reaction in New York Market has obliged the buyers to wait for some more decrease in prices.
The global economic situation is also painting a gloomy pictures in 2009. According to latest IMF report of the first quarter of 2009, the, US economic out-put contracted at the annualised rate of 6.1 percent while business investment dropped at 37.9 percent as firms scrapped their development plans and axed jobs. US GDP decreased by US % 103.7 billions but consumer spending showed improvement contributing 1.5 percent to GDP. The US administration is reported to have worked out a plan to pump US $1.75 trillions in credit market to push down long-term rates and cost of mortgage. As per IMF first quarter reports, global economy may shrink by 1.3 percent.
In 2010 and 2011, global economies would not be back to normalcy. The 1.3 percent drop in economies may cut 1.0 million jobs while 2.0 drop shrinkage of global economy would cut 1.5 million jobs. Total loss of economic out-put may reach the level of US $4.0 trillions this year alone. IMF outlook for US economy is more bleak than world economy. The US economy may shrink by 2 percent this year - the largest decrease since 1946. For global recovery, US has to take the lead as the global depression took start from US. In this year, other prominent economies would contract differently viz: Japan 6.27 percent, Russia 6.0 percent, Germany 5.6 percent, Britain 4.1 percent, Mexico 3.72 percent and Canada 2.5 percent. Economies of China and India, being the powerhouses of production, may not fact contraction but slackness in growth at 6.5 percent and 4.5 percent respectively.
In US unemployment percentage may range between 8.9 and 10.1 percent. However, in 2010, the IMF predicts US economy to remain flat - neither shrinking nor growing. In 2010, the German economy is forecast to shrink by 1.0 percent and that of Britain by 0.4 percent. Economies of other countries such as Japan, Russia, Canada, Mexico are projected to grow again while China and India to speed up the growth rate.
For Pakistan, IMF see hard days in 2009 when exports would further decrease, unemployment rate would increase making living of people more difficult. Like other countries, Pakistan has to face the affects of global recession but its domestic factors pose more dangerous threat to its economy.
The loans from IMF and other donors may in the long run pose great problems of repayment for Pakistan. The driving force of our economy is the textile sector. Share of textile in the exports of the country is decreasing fast which would have very bad affect on our social structure, law and order situation, employment and living standard of the people.
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