KARACHI: A mixed trend prevailed in cotton prices during the previous week, with low trading volume and a decline in New York cotton prices. Pakistan leads in importing American cotton.
However, urgent measures are needed to revive local cotton industry, severely impacted different crises.
The decline in cotton cess revenue has affected Pakistan’s cotton research programs. This decrease, combined with falling cotton production, not only harms farmers’ economies but also severely affects the agricultural sector nationwide, as noted by Sajid Mahmood. Many farmers have stopped cultivating cotton due to high production costs.
The local cotton market experienced a mixed trend last week, with prices fluctuating due to various factors. The New York cotton market; however, witnessed a decline. The availability of standard quality cotton continues to dwindle, while prices for standard cotton bales show an upward trend.
However, textile mills are blending standard and substandard cotton due to increased prices, which has led to a slight decrease in standard cotton prices. As a result, spinners have reduced their purchases, causing trading volumes to decrease relatively.
Due to these factors, a large group of spinners have increased their interest in imported cotton. As daily arrival of Phutti continues to decline, textile mills are producing mixed-quality cotton while stocking up on standard-quality bales, anticipating future price increases. However, imported cotton prices are decreasing, prompting a significant segment of textile spinners to shift towards imported cotton.
According to sources, the rise in prices of substandard Phutti does not indicate leftover cotton in fields; rather, the scarcity of cotton has led to the closure of several ginning factories.
Due to the severe financial crisis in the market, several textile mills are purchasing cotton on credit. Meanwhile, the crisis in the textile sector persists, particularly the unresolved energy issue. Additionally, large quantities of cotton yarn are being imported.
There’s a sluggish market for New York cotton, with prices declining due to the appreciation of the US dollar. Pakistan is the largest importer of American cotton.
The Pakistan Central Cotton Committee (PCCC) has been consistently complaining that the All Pakistan Textile Mills Association (APTMA) has failed to pay the Cotton Cess for several years, bringing cotton research to a standstill. Dr Yousaf Zafar, Vice President of PCCC, expressed this concern to the National Assembly’s Standing Committee for Ministry of National Food Security and Research (MNFSR).
The rate of cotton in Sindh is in between Rs 16,500 to Rs 18,200 per maund. The rate of Phutti is in between Rs 7,000 to Rd 8,600 per 40 kg.
The rate of cotton in Punjab is in between Rs 17,800 to Rs 18,200 per maund. The rate of Phutti is in between Rs 7,300 to Rs 8,800 per 40 kg.
The rate of cotton in Balochistan is in between Rs 17,300 to Rs 18,500 per maund. The rate of Phutti is in between Rs 7,800 to Rs 9,000 per 40 kg.
The Spot Rate Committee of the Karachi Cotton Association decreased the spot rate by Rs 200 per maund and closed it at Rs 17,800 per maund.
Nasim Usman, Chairman of the Karachi Cotton Brokers Forum, said that the New York cotton futures market experienced a decline, with prices trading at 69 to 70 US cents per pound.
According to the USDA’s weekly export and sales report, 153,300 bales were sold for the 2024-25 crop year. Turkey led the purchases with 41,500 bales, followed by Pakistan with 40,000 bales, and China with 19,000 bales. For the 2025-26 crop year, as many as 1,000 bales were sold, which was bought by Mexico.
Meanwhile, cotton, the backbone of Pakistan’s economy, is fighting for its survival. South Punjab, once known as the cotton belt, has lost its identity under the weight of excessive sugarcane and rice cultivation. These crops, with their insatiable water requirements, are not only reducing land availability for cotton cultivation but also rapidly depleting precious water resources.
The shift towards water-intensive crops has severely impacted Pakistan’s cotton production, exacerbating the country’s reliance on imports. This trend has far-reaching consequences for the national economy, textile industry, and farmers’ livelihoods. Revitalising cotton production and promoting sustainable agricultural practices are crucial for Pakistan’s economic stability and water security.
Rana Muhammad Salim, a member of the Punjab Assembly, has highlighted the alarming issue of sugarcane and rice cultivation posing a significant threat to Pakistan’s national economy and water resources. He pointed out that these crops require massive quantity of water - 2,500 to 3,000 litres per kilogram of sugar and 4,000 litres per kilogram of rice - whereas cotton cultivation uses only 100 to 200 litres per kilogram.
This imbalance is rapidly depleting Pakistan’s underground sweet water reserves, putting additional pressure on the agricultural economy, he said emphasising that the country’s textile exports amount to $18 billion, whereas rice exports barely reach $4 billion, and that too at the cost of 400 billion rupees worth of underground water. This stark comparison underscores the failure of Pakistan’s agricultural system.
Punjab Assembly Speaker Muhammad Ahmed Khan expressed concerns last week about the issues facing Pakistan’s cotton industry. Briefing a committee, he identified sugarcane and rice cultivation as major factors contributing to cotton’s decline and emphasised the need to ban these crops in the cotton belt region. Urgent measures are crucial for the revival of Pakistan’s cotton industry, including announcing support prices, banning imported cotton, and investing in research and development. These steps will not only bolster the national economy but also open new avenues of hope for water resources and farmers, he said. “In fact, Pakistan’s cotton industry is integral to the country’s economic development, with the nation being heavily dependent on the cotton industry and its related textile sector. The industry accounts for 55 percent of the country’s export earnings and provides livelihoods for millions of farmers.”
However, Yousaf Zafer, Vice President of the Pakistan Central Cotton Committee (PCCC), briefed the committee, explained that the drop in cess revenue has severely impacted the cotton research programmes, which are now facing significant financial strain.
Zafer attributed the shortfall to the non-payment of cotton cess by a majority of textile mills, with outstanding liabilities now exceeding Rs3.44 billion. He noted that the cess rate has not been revised since 2012, further compounding the financial challenges faced by the PCCC. “Due to a decrease in cess collection and limited financial resources, the PCCC’s research program has been badly affected,” Zafer told the committee.
He also highlighted that many major textile mills are refusing to pay cess on both domestic and imported cotton, citing ongoing litigation. Currently, cess collection is limited to a few mills, while a large number of mills continue to evade payments. He said that the Supreme Court’s judgment in 2019 and the Lahore High Court (LHC) in 2023 confirmed that PCCC is entitled to collect cess on imported cotton under the Cotton Cess Act 1923 as the word “Consumption” is written in the Act. Thus, there is no need for Federal Board of Revenue (FBR) or Customs involvement, and cess collection on imported cotton is not contingent on any import requirements, he said, adding that the mills that fail to submit monthly cess returns by the 7th of each month are classified as “defaulters” and average consumption is calculated as a 30 percent increase per annum.
However, All Pakistan Textile Mills Association (APTMA) has termed the statistics presented by the Pakistan Central Cotton Committee (PCCC) as controversial, claiming that the pending dues have been exaggerated. An APTMA official argued that the actual outstanding amount is not more than 700-800 million rupees, and requested the PCCC to obtain accurate data from the Federal Board of Revenue (FBR) once again.
APTMA and the Pakistan Cotton Ginners Association (PCGA) have emphasised the need for farmer-friendly policies, increased investment in agricultural research, and better infrastructure. They also stressed the importance of coordinated action among all stakeholders, including the government, to ensure sustainable growth and strengthening of the cotton industry, which significantly contributes to Pakistan’s economy. This development highlights the ongoing discussions and efforts to address the challenges faced by Pakistan’s cotton sector, which is crucial for the country’s textile industry and overall economic growth.
The APTMA representative stressed the need for introducing a better, genetically modified, and certified seed system. He emphasized that this process should be accelerated and supported by reforming various approval systems to facilitate private sector research and development organizations. Furthermore, he advocated for emergency measures in cotton research, focusing on variety, high yield, and desired fibre properties. This push for improved cotton research and development is crucial for Pakistan’s textile industry, which significantly contributes to the country’s economy. The APTMA’s efforts align with the government’s goals to enhance agricultural productivity, particularly in the cotton sector. By promoting a certified seed system and encouraging private sector involvement, Pakistan can boost its cotton production and competitiveness in the global market.
The chairman of the committee directed the secretary of the Ministry of National Food Security and Research (MNFS&R) to compile a comprehensive report incorporating practical recommendations from all relevant stakeholders to address the challenges faced by the cotton sector. The committee also agreed to invite representatives from key ministries, including Finance, Energy, and the Federal Board of Revenue, as well as, provincial governments, to emphasize the role of agricultural extension programs in supporting farmers and boosting cotton production.
MNFS&R Secretary Ali Tahir informed the committee that Pakistan’s cotton import bill was $1.8 billion in 2023-24, making it the largest cotton importer this year.
Khalid Mahmood Khokhar, president of Pakistan Kisan Ittehad (PKI), urged the committee to take effective measures to improve cotton research, citing high production costs as a major reason why many farmers have stopped cultivating cotton. Khokhar also expressed concerns about the financial burden of high electricity rates for tube-wells on farmers.
The committee aims to prioritise agricultural extension programs and address the challenges faced by the cotton sector, recognizing the importance of cotton production in Pakistan’s economy. This effort is crucial for Pakistan’s agricultural sector, especially considering the country’s significant reliance on cotton imports.
Khalid Khokhar has urged the government to take immediate action on wheat support prices, warning that delays could lead to reduced wheat cultivation. He also suggested declaring an agricultural emergency to tackle these challenges.
His concerns come amid fluctuating wheat prices in Pakistan, with current rates ranging from 2,700 to 3,010 rupees per 40 kg, and 73 rupees per kg. The government’s control price is set at 2,850 rupees per 40 kg, but actual prices vary across cities, causing confusion among farmers.
In Punjab, wheat prices range from 2,600 to 3,000 rupees per 40 kg, while in Sindh, prices are higher, ranging from 2,800 to 3,100 rupees per 40 kg ¹.
Khokhar’s proposal was discussed in a meeting attended by MNAs, including Rashid Ahmed Khan, Rana Muhammad Hayat Khan, Muhammad Moeen Wattoo, and other senior officials from the Ministry of National Food Security and Research (MNFS&R).
Pakistan has emerged as the largest buyer of American cotton, surpassing other countries, driven by factors such as sales tax exemptions and lower-than-expected domestic production. Due to weather-related damage to local crops, Pakistani textile mills are expected to import 5.5 million bales of cotton this year.
This development is significant, considering Pakistan’s cotton import value stood at $974.88 million in 2023. The country’s textile industry relies heavily on cotton imports to meet its demands.
Pakistan’s rise to becoming the top importer of American cotton is also influenced by China’s increasing cotton consumption, projected to reach 7.80 million tons in 2023-24, leading to higher imports. As global textile demand fluctuates, Pakistan’s position in the international cotton market is noteworthy.
Meanwhile, Head of the Technology Transfer Department at the Central Cotton Research Institute, Multan, Sajid Mahmood, has expressed grave concern over the declining state of cotton in Pakistan. Once the backbone of the national economy and the hallmark of Southern Punjab, cotton—referred to as “white gold” are now in a critical crisis. He attributed this decline to factors such as water mismanagement, the unchecked cultivation of sugarcane and rice in the cotton belt, and inadequate investment in research and development. He highlighted that this downturn has not only jeopardized the livelihoods of farmers but has also caused significant setbacks to the country’s agricultural sector.
Sajid Mahmood called on the government to take urgent and strategic action, including banning non-cotton crops in the cotton belt, announcing support prices for cotton in a timely manner, and prioritizing investments in research and development. He emphasized that cotton is far more than a crop. It represents the aspirations of farmers, the strength of the economy, and the pride of the nation. Failure to act decisively, he warned, could result in
permanent damage to this vital sector and the economy it underpins.
Copyright Business Recorder, 2024
Comments
Comments are closed.