EDITORIAL: While it is not really surprising that Pakistan’s per acre cotton production has dropped to half the regional average, given the visible downward trend for at least two decades, it is still shocking that the government is not treating it as an emergency.
The ECC (Economic Coordination Committee), which is headed by the finance minister himself, merely took note of it and directed the ministry of national food security and research to ‘look into developing a support price mechanism in consultation with the ministry of industries and production’. And the commerce division secretary underlined the need for adopting international principles and also undertaking a study on the comparative advantages of crops.
Since cotton production has been decreasing since it reached a high of 14.1 million bales in 2004-5 – dropping to seven million bales in 2020-21 and about 9.5 million bales in 2021-22 – and it is the key crop in Pakistan’s agricultural economy, policymakers must answer why nobody thought of taking these steps earlier.
It seems it was only after last year’s devastating floods cut production to only 4.7 million bales (against a target of nine million) that authorities felt that they had to really do something about this problem since cotton production was declining along with a shrinking of the plantation area, thinning margins and forcing farmers to opt for other crops like rice, maize and sugarcane.
This is bad news for textiles, Pakistan’s flagship exports that are already losing ground to competitors up and down the region because of absurdly high costs of production that price them out of the market right at the beginning of the cycle. Yet the food ministry seems pretty confident that textile sector demand can be met by ramping production up to 15 million bales in ‘a short span of time’. The cotton price intervention policy of 2021-22 stabilised domestic prices and raised production by two million bales despite a seven percent decline in cultivated area.
The 2022-23 policy was working on the same lines till floods damaged the standing crop. Now, after the floods, growers and the textiles mills’ association are at odds over the new intervention price. It was revealed in February that the revised average cost of production “is now approximately Rs 7,000 per 40kg”, with growers demanding an intervention price of around Rs 7,000-8,000 per 40kg while the ministry for national food security was proposing Rs 8,500 per 40kg for ECC’s consideration.
It’s also very strange that stakeholders had to emphasise, for the government’s benefit, that the announcement of the intervention price is best made ahead of the main sowing season to help double-minded farmers sort out things like planting area and investments in crop management in time. That alone goes to show that everybody is fed up with the ad hoc manner in which this problem is usually treated.
The ministry for national food security has also recommended the constitution of a price review committee with the mandate to propose interventions on a fortnightly basis, and also that ECC should advise TCP (Trading Corporation of Pakistan) and/or provinces when to sell the procured cotton after assessing local and international markets.
ECC will most likely accept these proposals, but that should not be the end of the matter. Cotton, just like other agricultural products, has been losing yield as well as production area, dragging the entire sector down. Just last week, during a conference in Karachi, participants agreed that restoring agri productivity and jacking up its growth rate to around six percent was the surest way to drag the country out of its crises of deficits.
It’s bad enough that authorities have let things come to such a pass. But it’s much worse that they’re still not giving agri problems, especially declining cotton production, the attention they deserve.
Copyright Business Recorder, 2023
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