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Prime Minister Gilani has constituted a Cabinet committee to evaluate budgetary proposals submitted by and dedicated to the development of the textile sector. There is a consensus that the sector contributes significantly to the economy of the country ranging from its contribution to the country's Gross Domestic Product to providing employment to millions to earning export revenue.
Provisional figures of 2007-08 as revealed in the Economic Survey indicate that cotton was grown on more than 3 million hectares and total output of bales for the year was 11.6 million. However what is disturbing about this lower end value addition of the crop is that yield per hectare of cotton crop has fluctuated over the past decade - from 641 kg per hectare in 1999-2000 to 572 kg per hectare in 2003-04 to 711 kg per hectare in 2006-07 to 649 kg per hectare in 2007-08.
While these figures are higher than India's yet it is significant that India, by using high tech cotton research, has narrowed the yield gap significantly - from 267 kg compared to 615 kg in Pakistan in 1991 to 470 kg to Pakistan's 679 kg in 2006. One reason for this may be that Pakistan uses normal seeds and biotech cotton has not yet been introduced while India has an area of 3.8 million hectares cultivated with BT cotton.
The International Cotton Advisory Committee, in its data, reveals that Pakistan performed poorly in comparison to other countries: Australia has a comparable yield of 1,864 kg, Syria 1,571 kg, Mexico 1,312 kg and Turkey 1,289 kg. Thus an effort has to be made by the government to ensure the yield per hectare of this crop rises to the level of our competitors, made possible by technology and high quality seeds.
Additionally what is disturbing is that the value addition of each bale is much lower in Pakistan than in other countries which are competing with us in world markets like China, India and Bangladesh.
Thus Pakistan's capacity to convert 100 million dollar worth of raw cotton into value addition of not more than one billion dollars compares poorly to China's capacity to convert 100 million dollars worth of cotton to 4 billion plus dollars and India's 2 billion dollars; this maybe because Pakistan exports cotton, yarn and grey cloth to those countries with a more developed cotton industry. Thus it is imperative for the government to encourage value addition in this sector.
Yet another problem faced by the sector is the slapping of quotas and prohibitive tariffs on our exports by our major buyers abroad. Unfortunately our successive governments have not yet grasped the concept that they need to proactively engage with the governments of our major buyers, US, Canada, Japan and Europe, at a diplomatic level and seek higher quota as well as duty concessions to enable us to compete with countries like South Africa, Jordan and Kenya who enjoy easier access to the international market.
In this context it is unfortunate that Musharraf's frequent visits abroad were not focused on trade but on aid and the same trend was visible during President Zardari's visits abroad. But what can the government do to promote the cotton sector's productivity as well as exports, elements that would have a major positive impact on the popularity of the government? First and foremost textile experts argue that the value chain of the sector from spinning to clothing is losing its market abroad due to the high cost of doing business in Pakistan.
This would include high cost of energy, load shedding as well as high interest rates. In addition yarn exports would not be possible until the spinning industry is granted concessions which could cut cost by 10 percent, so goes their argument. And finishing sector would be compromised if the government promotes exports of unprocessed raw fabric.
Thus a comprehensive policy is required for the cotton sector. Analysts also cite the examples of India, Bangladesh and China where exporters are facilitated through different methods including extraordinary subsidies to their value added sector at the present moment in time when global recession is impacting on global demand of textiles and products. Or in other words Pakistani textile sector requires a level playing field to continue to contribute to the GDP.

Copyright Business Recorder, 2009

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