New crop cotton sowing is gaining momentum on very conducive weather conditions. The tail-ender growers in Sindh are reportedly not getting share of water required for cotton sowing. However, irrigation water supply is reported to be satisfactory in Sanghar district where cotton sowing is in full swing.
In the running season (2009-10), Sanghar district produced 1.9 million running bales against 1.35 million bales produced last season. The increase is about 41 percent. Encouraged by high field yield and handsome return, cotton growers may produce over 2.0 million bales in Sanghar district next season.
Irrigation water supply is better on upstream while poor on down stream. Tube-wells are also helping the growers in cotton sowing. It is estimated that national cotton area may be increased by 10-12 percent which may give higher production up to 14.0 - 14.5 million local weight bales next season. Central Punjab area appear quite ahead of Lower Sindh in cotton sowing because water supply position through canals and tube-wells is comfortable there and these areas may deliver new crop cotton earlier than lower Sindh. After all, weather would play key role in cotton production.
The Government of Pakistan is understood to have developed strains of Bt cotton and has a plan to release Bt cottonseed for general commercial sowing. Pakistan has no option except going for GM technology for increasing its productivity and production at least to the level of its domestic requirements. This season, we produced some 12.7 million running bales against 11.304 million bales last season - 12.35 percent more than last season. Domestic mill consumption in early months of the season remained low but in the next months it has accelerated and this season's total domestic consumption may be around 14.0 million bales. In seven months of this season (August to February, 10), 122,603 metric tons (= 720,579 bales of 170-Kg each) of cotton has been imported but in balance five months, the pace of arrival of imported cotton would increase considerably to reach a level of 1.8 to 2.0 million 170-Kg bales in this season.
In August - December, 09, local spinning mills were busy in handling the local cotton crop. Domestic cotton exporters have committed some 958,332 local weight bales in exports and have shipped 731,212 bales by 7th March, 10. Thus some 225,120 bales have been shipped short and some shipment may be made in coming months but the apparent default may be quite large. By the end of this month, a very low inventory of unsold cotton of less than 250,000 bales would be left.
In the local market, cotton prices remained under pressure and shed about Rs 400 to 600 per maund from peak rate of Rs 5,800 per maund ex-gin.
The prime reason for sluggishness in local cotton market is restriction on export of cotton yarn. On the persuasion and demand of weaving and towel industries, the Government of Pakistan had capped export of cotton yarn to 50 thousand metric tons per month, which was reduced to 35 thousand metric tons. The spinning industry has been protesting against this government decision from the day one and on the call of their apex body All Pakistan Textile Mills Association (Aptma), all the spinning mills observed a token strike of one shift on the 18th instant. On the intervention of the Punjab Governor, the Aptma called off their strike and the strikers were called for negotiations. Some reports indicate that the capping limit may be increased to 45 or 50 thousand metric tons till end June, 10.
India has increased its seasonal cotton production through use of modern technologies not only to achieve self-sufficiency in cotton but to become a cotton surplus country to the extent of some 7.0 million 170-Kg bales. India has become the second largest producer of textile products. India has become enough competent to face competition from neighbouring countries. India has informed the World Trade Organisation (WTO) that it would offer duty-free and quota-free market access to 14 Least Developed Countries (LDC) of the world including Bangladesh, Nepal, Bhutan, Cambodia and some of the African countries. The items enjoying market access also include cotton textile and ready made garments. Perhaps, India may be the first country offering such market free-access in this region. Actually, the opportunity of filling up the gap of supply of cotton textiles to US and European countries has been fully cashed by China, India and Bangladesh.
Pakistan has missed this opportunity as it is facing host of adverse conditions such as cotton shortage, water shortage, power shortage, high cost of production including high financial costs, deteriorating law and order situation, war-like situation on western borders, poor domestic safety and security, high degree of corruption, political instability and poor economic and financial performance.
On the demand of IMF, Pakistan government is going to impose 16 percent VAT (Vale added tax) on all commodities perhaps leaving some eatables from 1st. July, 2010 which would make the things even worse. This would also increase cost of production making export price more uncompetitive. Pakistan, basically being an agriculture country is short of almost all major crops including cotton, wheat, edible oil, sugar and others. Textile our main industry is losing competence and viability for these reasons and the local entrepreneurs and textile owners are thinking to shift their industries to other countries where industrial and business conditions are favourable just like Bangladesh. China has successfully fought the global economic recession and has emerged quite successful. China has increased its textile production and exports in a big way. Cotton growers in China and India may face competition from food crops growers but increase in cotton area in India may seen on higher return.
Only a few weeks ago, about 10 percent increase in cotton area in China was expected but on recent surveys, the situation has changed and now cotton area in China be the same as in 2009-10. In China, growing of vegetable and fruits is many times more profitable than growing cotton.
However, a clear picture as to the size of cotton area, may emerge in the month of May when cotton sowing will be completed. In USA, cotton growers are very much eager to increase cotton area to over 10 million acres and some place it at 11.0 million acres. According to some estimates, world cotton production in 2010-11 may be some 10.0 million 480-lb bales to 112.4 million480-lb bales but even then world consumption would be higher than production. World cotton prices are likely to go down on reports of larger area and high production.