As sowing period for kharif crops draw closer, lobbying for institution of support price for cotton seems to be gaining pace. Last month, Minister for MNFS&R had proposed an indicative price of Rs3,500 per maund. As per latest news reports, ginner’s associations have deemed the rate insufficient, calling for a per maund price Rs4,000 to ensure the crop remains competitive compared to substitutes.
To regular followers, these demands should come as no surprise. Keen to correct the BOP imbalance, economic managers have made their vulnerabilities obvious by giving into every concession demanded, from cheaper gas & electricity prices to rebates and currency devaluation. For export-oriented industries, all in the hope to fast restore some semblance to FX reserves.
It is only natural if this sentiment is taken advantage of. When the government is grasping at straws to summon a dollar bonanza, why farmers should be left behind.
Lost in this frenzy is the unequivocal lesson from researches over the past decade. The loss of garment sector’s export-competitiveness, according to both public and private sector organizations alike, is rooted in country’s failure to make headway in man-made fibre-based textiles. (Those interested in further reading may explore CDPR-IGC-LUMS analysis of Pakistan garment sector (2013), and policy note in SBP’s Special Section on synthetic textiles in 3QFY18 report).
Yet, instead of taking long-term course corrective measures around which research literature already exists, policymakers are giving into primal fears. Granted that cotton production has been stifled due to non-availability of quality seeds and other inputs. But proposals to ban cultivation of competing crops such as maize are beyond astounding.
Similarly, it is pertinent to note that the advocacy for indicative price for lint is not coming from APTMA, whose members should be the direct victim of the fallout from poor raw material availability. At a time when 65 percent of total global fiber consumption is MMF-based, even the most basic garment unit operator appreciates that the future of his industry does not rest with a crop exposed to capriciousness of water availability, pest attacks, or act of god.
So where is the argument for imposition of floor price on cotton coming from? More significantly, can the comparisons drawn with indicative pricing on wheat and sugarcane be truly deemed resounding successes beyond increasing output in absolute terms of tonnage and acreage?
During the past five years, production and land utilization under sugarcane increased dramatically as a response to prohibitively high support prices. Yes, the crop did become more attractive to farming community, but with no noticeable change in yield or sucrose recovery. Instead, BR Research analysis indicates that beyond Bahawalpur and DG Khan divisions, crop quality in terms of recovery has declined in central Punjab.
Competitive crops may have gained ground on cotton’s expense, but not on farmer’s. After all, responding to market conditions, agricultural community readily switches to crop with higher rate of returns, a rational response taken in self-interest.
Now that country’s sugar output has peaked, chances of further seasonal increases in cane’s support price appear slim. With cane prices plateau, pressure groups are ready to switch back to cotton. After all, foreign exchange depletion is a national crisis, and there is nothing like national interest to motivate a businessman, whether a grower or a seth.
Progressive farmer associations in the country have long noted that not only support prices promote inefficient practices in agriculture but are to the detriment to small/subsistence farmers who fail to extract fair price for their produce. Without introducing capacity building in farming community for efficient application of water, availability of pes-resistant seeds, and security of contract, the experiment is bound to fail again.
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