KARACHI: Pakistan has recorded a concerning decline in cotton production by 28.50 lac bales, raising alarms within the industry. Experts attribute this shortfall to climate change, inefficient farming practices, and challenges faced by farmers.
The situation has sparked widespread concern among stakeholders, who are urging immediate action to address the issue.
A noticeable slowdown has been observed in cotton prices and trade activities. Market analysts suggest that fluctuations in global markets and reduced local demand have negatively impacted cotton prices. This trend has further exacerbated the challenges faced by the textile sector, which heavily relies on cotton as a raw material.
Textile spinners are increasingly turning to imported cotton over locally produced cotton. Industry representatives highlight that the quality and pricing of imported cotton have made it a more attractive option. This shift has raised concerns about the future of domestic cotton production and its impact on the local agricultural economy.
Experts have proposed extending the Export Finance Scheme (EFS) facility to local cotton, yarn, and fabric imports to create a level playing field. They argue that relying heavily on imported cotton, yarn, and fabric requires significant foreign exchange, which could strain the economy. The proposal aims to balance the market and support local industries.
Ginners are facing anxiety due to excessive cotton stocks. Market sources indicate that the surplus has led to fears of a price drop, causing unrest within the industry. Stakeholders are calling for measures to stabilise the market and prevent further financial losses.
Representatives of the textile industry have requested the government to reconsider the +GST (General Sales Tax) imposed on the sector. They argue that reducing the tax rate would boost the industry and enhance exports, providing much-needed relief to businesses struggling with high operational costs.
Efforts to revive the cotton sector are gaining momentum with the organisation of cotton conferences and seminars. Experts emphasise the need for effective strategies to ensure positive outcomes from these initiatives. The events aim to bring together stakeholders to discuss solutions and implement actionable plans for the sector’s recovery.
Federal Minister for National Food Security and Research (NFSR) Rana Tanveer Hussain has appealed to the International Cotton Advisory Committee (ICAC) delegation in Pakistan for collaboration in reviving the cotton sector. He stressed that global cooperation could play a pivotal role in improving Pakistan’s cotton industry and ensuring its sustainable growth.
Experts have underscored the urgent need for immediate measures to address the challenges facing the cotton sector. They believe that collaboration between the government, industry, and farmers is essential to stabilise and strengthen the sector. Without coordinated efforts, the decline in cotton production and its ripple effects on the economy could worsen, highlighting the need for swift and decisive action.
Last week, the local cotton market experienced mixed trends in cotton prices. Limited textile spinners showed increased interest in imported cotton due to its better quality and lower prices, especially with the availability of the Export Finance Scheme (EFS). Additionally, significant quantities of cotton yarn and fabric were imported, while local cotton remains subject to an 18% sales tax.
The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Agriculture Tax Task Force and the Special Investment Facilitation Council (SIFC) have recommended either withdrawing the EFS facility on imported cotton, imposing import duties, or eliminating the sales tax on local cotton to create a level playing field.
A meeting of the Economic Coordination Committee (ECC) was held recently to address this issue, but no concrete solution has been reached so far. Stakeholders remain hopeful for a resolution to balance the market dynamics and support the local cotton industry.
The Pakistan Cotton Ginners Association has released the latest cotton production statistics for the country up to January 31. According to the report, the total cotton production during this period stands at fifty five lac and ten thousand million bales. This marks a significant decrease compared to the same period last year, when production was recorded at eighty three lac and forty nine thousand bales. The current figures reflect a shortfall of twenty eight lac and thirty nine thousand bales, highlighting a notable decline in cotton output.
In recent days, two significant cotton conferences were held in Karachi and Multan to discuss the revival of cotton cultivation. The conference in Karachi was organised by the Pakistan Central Cotton Committee (PCCC) and Better Cotton, while the one in Multan was hosted by PCCC and Cotton Connect. During these conferences, experts and stakeholders shared recommendations and advice on early sowing techniques and other best practices for cotton farming.
Additionally, the government, particularly the Punjab Agriculture Department, has been actively organising meetings to raise awareness among cotton farmers. A series of seminars are also being conducted to educate farmers on modern cultivation methods and strategies to improve yield.
Reports indicate that early cotton cultivation has already begun in several regions. To support this initiative, the Punjab government has allocated 1 million acres of land specifically for early cotton farming, signalling a strong push to revitalise the cotton sector in the province.
In Sindh, the price of cotton has been set between 17,500 to 18,000 rupees per maund, based on quality and payment terms. Meanwhile, in Punjab, cotton prices have remained steady at 17,800 to 18,000 rupees per maund, with the supply of Phutti nearly exhausted. Similarly, in Balochistan, cotton stocks have almost completely run out.
The Spot Rate Committee of the Karachi Cotton Association has reduced the spot rate by 200 rupees per maund, closing the rate at 17,800 rupees.
Karachi Cotton Brokers Forum Chairman Naseem Usman reported mixed trends in international cotton prices, with New York cotton futures trading between 66.50 to 67.50 American cents per pound.
According to the USDA’s weekly export and sales report, one lac and eighty eight thousand and nine hundred bales were sold for the 2024-25 season. Turkey led the purchases with forty nine thousand and seven hundred bales, followed by Pakistan with forty four thousand and three hundred bales, and Vietnam got the third place with thirty thousand and eight hundred bales. For the 2025-26 Season, fourteen thousand and nine hundred bales were sold, with Malaysia topping the list with thirteen thousand and two hundred bales and Japan securing the second position with twelve hundred bales.
In a significant gathering aimed at addressing the declining cotton production in Pakistan, the first-ever National Conference on Cotton Revival was jointly organised by the Pakistan Central Cotton Committee (PCCC) and Cotton Connect. The event brought together agricultural experts, government representatives, and leaders of farmer organisations to deliberate on the multifaceted challenges facing the cotton sector.
During the conference, speakers emphasised the critical need for strengthening research and development (R&D) and adopting modern scientific approaches to revive cotton production. Participants unanimously agreed that the development of high-yield, climate-smart cotton varieties is an urgent necessity. However, they highlighted that the lack of financial resources for R&D remains the biggest obstacle to progress.
Experts expressed deep concern over the adverse impact of declining cotton yields on the national economy. They stressed that sustainable funding for research institutions is indispensable to enable cutting-edge scientific research, which is vital for the revival of the cotton sector. The conference also shed light on the severe financial challenges faced by the PCCC, the country’s premier cotton research institution. The non-payment of billions of rupees in cotton cess by the textile industry has severely hampered the PCCC’s operations, stalling critical research on seed development, new varieties, and pest management.
It was noted that Pakistan, once the world’s fourth-largest cotton producer, has now fallen to seventh place due to a decade-long neglect of key research institutions like the PCCC. This neglect has led to stagnation in R&D and a significant drop in cotton production.
Participants called on the government and relevant stakeholders to formulate a long-term policy for cotton R&D and ensure the immediate payment of outstanding cotton cess by the textile industry. They argued that these measures are essential to stabilize the cotton sector and address the challenges facing the agricultural economy.
The absence of representatives from the textile industry, the largest consumer of cotton, was a notable disappointment at the conference. Despite being the primary stakeholder, the industry’s non-participation raised questions among attendees about its commitment to resolving the sector’s issues.
The conference concluded with a call for collective action to revive Pakistan’s cotton sector, emphasising the need for collaboration between the government, research institutions, and industry stakeholders to ensure a sustainable future for cotton production in the country.
The concerns of textile industry are growing over the potential revision of the Generalized System of Preferences (GSP) status, which has cast a shadow over its export prospects. Following the acquisition of attractive orders at a recent textile fair in Germany, local textile mills have been stockpiling duty-free cotton and cotton yarn from international markets in anticipation of increasing shipments of textile products to Europe.
In the first half of the fiscal year 2025-26, imports of duty-free cotton and yarn have surged to nearly $2 billion. However, the imposition of an 18% sales tax has further strained the already struggling local cotton industry, which is now also worried about the European Union’s possible review of the GSP Plus status.
The EU had granted Pakistan the GSP Plus status in 2014, leading to a significant 108% increase in Pakistani textile exports to the EU due to preferential tariffs. In October 2023, the European Parliament unanimously voted to extend the GSP Plus status for developing countries, including Pakistan, until 2027, allowing them to enjoy duty-free or reduced-duty access to European markets.
However, during a recent visit by an EU delegation to Pakistan, it was announced that the economic bloc would review this status in June, raising concerns within the cotton industry. A discussion between a local trader and an EU representative revealed that while the GSP Plus extension is valid until December 31, 2027, new regulations could be implemented much earlier.
The EU representative stated on February 2 that GSP monitoring is an ongoing process, and inter-services monitoring mission is expected by mid-2025 as part of the continuous evaluation. This has added to the difficulties of the textile sector, which is already grappling with multiple challenges.
Despite these uncertainties, the industry remains hopeful about expanding its footprint in the European market, leveraging the duty-free imports of raw materials to maintain competitiveness. The outcome of the EU’s review in June will be crucial in determining the future trajectory of Pakistan’s textile exports.
Pakistan’s textile industry risks plunging deeper into crisis if the Generalized System of Preferences Plus (GSP+) status undergoes negative revisions, warn industry experts. Textile mills have already stockpiled large quantities of duty-free cotton and yarn imported from abroad, banking on increased exports to Europe after securing lucrative orders at a recent textile fair in Germany.
While cotton and yarn imports remain duty-free, local cotton faces an 18% tax, prompting mill owners to prioritise foreign commodities over domestic produce this year. This shift has burdened farmers, ginners, and spinners with rising costs. According to the Pakistan Bureau of Statistics, the country spent a record $1.91 billion on cotton and thread imports during the first half of fiscal year 2025, marking a $610 million increase compared to the same period last year. Further large shipments of cotton and yarn are anticipated between January and March 2025, raising concerns about pressure on foreign exchange reserves.
Cotton Ginners Forum Chairman Ahsan ul Haq highlighted that despite this year’s domestic cotton production falling nearly 50% short of targets and 34% below last year’s output, ginning factories reported higher stockpiles. As of January 31, ginning factories held 486,000 bales of cotton, up 114,000 bales (31%) year-on-year. However, textile mills purchased only 4.978 million bales from local ginners this season, a sharp decline of 2.7 million bales (35%) compared to the previous year.
However, Federal Rana Tanveer Hussain met with a delegation from the International Cotton Advisory Committee (ICAC) led by its Executive Director, Eric Trachtenberg. The delegation included key representatives from the cotton and textile sectors.
During the meeting, the Minister discussed Pakistan’s cotton production, trade dynamics, and advancements in the textile industry. He emphasised the importance of sustainable cotton cultivation and highlighted opportunities to enhance market access through collaboration with ICAC.
The talks focused on strengthening partnerships to drive innovation and efficiency in Pakistan’s agricultural and textile value chains.
Copyright Business Recorder, 2025
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