KARACHI: The ongoing spell of rains in the cotton belt has led to a surge in cotton prices, while business volume remains relatively low. The cotton crop has suffered a significant damage due to the persistent rains, as textile spinners are focusing more on importing cotton.
The ongoing severe crisis of cotton was also highlighted in the National Assembly. Pakistan’s textile industry is facing the severe crisis due to unfavourable weather conditions, a decrease in cotton cultivation, and falling demand in local and international markets.
The Crop Reporting Service of Punjab’s Agriculture Department has released data on cotton production in Punjab up to August 16, which shows a 19.4% decrease in cotton production compared to the yield of last year. However, Dr Yusuf Zafar, Vice President of Pakistan Central Cotton Committee (PCCC) has expressed severe reservations about the cotton data for the current season.
During the past week, the local cotton market experienced a collective surge in cotton prices due to limited supply caused by persistent rains, as well as, quality issues. Textile mills also adopted a cautious approach to purchasing and the business volume remained relatively low.
In fact, due to quality issues with local cotton and higher prices compared to international cotton, major textile mill groups are showing greater interest in importing cotton.
Meanwhile, the textile mills are still facing severe crisis due to different factors particularly costly energy. The government had promised to take action against Independent Power Producers (IPPs) and reduce energy prices. However, Prime Minister Shehbaz Sharif has formed a taskforce under the chairmanship of Energy Minister Awais Ahmed Laghari, but it has been given a month’s time. On the other hand, on August 14, the Prime Minister hinted at reducing electricity prices, but contrary to this, Nepra is continuously increasing electricity prices. This is why the industrialists and traders do not trust the government’s policies.
Due to the extremely high electricity prices in the country, industries are continuously shutting down, and many others are forced to operate partially, affecting the country’s industrial production. Unemployment and joblessness are increasing, leading to growing unrest. The country’s exports are being badly affected.
On the other hand, agriculture is also in a dire state, and farmers are severely affected. First, the corn crop was damaged, and then the mustard crop, followed by wheat with extremely low prices. Now the cotton crop is also being ruined. Farmers are suffering unbearable losses due to low prices of cotton. It is being said that the rice crop is better, but its price and demand are low in international markets. As a result, the country’s farming community is severely affected. This will lead to an increase in imports of agricultural products in the coming years.
However, regarding cotton, this year’s unfavourable weather conditions and rainfall on standing crops have affected the crop, which will prevent the production target from being met. Consequently, a big quantity of cotton will need to be imported. Currently, textile mills are showing greater interest in importing cotton due to better prices and quality of international
cotton, as well as, other facilities.
The price of cotton per maund in Sindh province is in between Rs 17,300 to 17,800 per maund, while the price of Phutti per 40 kg is in between Rs 6,000 to Rs 7,400.
In Punjab province, the price of cotton is in between Rs 18,000 to Rs 18,600 per maund and the price of Phutti is in between Rs 6,000 to Rs 8,200 per 40 kg.
In Balochistan province, the price of cotton is from Rs 17,300 to Rs 17,400 per maund, and the price of Phutti is from Rs 6,000 to Rs 7,400 per 40 kg. The Spot Rate Committee of the Karachi Cotton Association increased the spot rate by Rs 100 per maund and closed it at Rs 17,500 per maund.
According to Naseem Usman, Chairman of the Karachi Cotton Brokers Forum, the international cotton market has shown a mixed trend. The price of New York cotton futures is currently trading between 66 to 68 American cents per pound.
As per the USDA’s weekly export and sales report, one lac and nine thousand bales were sold for the year 2024-25. Pakistan topped the list by purchasing forty seven thousand and two hundred bales, followed by India with thirteen thousand bales, and Vietnam with twelve thousand and four hundred bales. For the year 2025-26, four hundred bales were sold, which were purchased by Mexico.
Meanwhile, according to cotton analysts, the country’s cotton production target will not be met this year. As a result of this crisis, around 30% of textile mills have shut down, with several operating partially. To meet the cotton shortage, large textile spinning mills are showing keen interest in importing cotton where prices are reasonable, quality is better, and payment terms are easy. So far, contracts for the import of around fifteen lac bales of cotton have been signed.
The annual consumption of spinning mills is expected to be around 12.5 million bales, while the registered and unregistered cotton production in the country is expected to be around 8.5 million bales this year.
Therefore, around thirty five lac bales of cotton will be imported to meet the cotton needs of local mills. According to them, the crisis in the textile sector is expected to continue until there is an improvement in local cotton production and an increase in demand in local and international markets.
Dr Yusuf Zafar Vice President of the Pakistan Central Cotton Committee (PCCC) has expressed serious concerns about the cotton statistics for this season. He identified insufficient research funding, lack of support prices for cotton, and artificial suppression of market prices as the primary causes of this decline, leading to substantial losses for farmers and a sharp reduction in cotton output. Dr Zafar emphasised that the decline in cotton production is a direct result of neglecting research and development, offering unfair prices to farmers, and monopolistic practices by middlemen. He warned that if these issues are not addressed urgently, farmers may abandon cotton cultivation altogether.
To boost cotton production, he recommended reducing production costs for farmers and making cotton cultivation more profitable compared to other competing crops. He also noted that this season’s cotton production may decline further due to a smaller cultivation area, prolonged heat-waves, unexpected rains, and severe whitefly infestations. Pakistan’s cotton production is expected to fall to 6-7 million bales (each weighing 170 kg) this season, far below the textile industry’s demand of 16 million bales. This shortfall will necessitate the import of approximately 5-6 million bales. The cotton crop is under threat from climate change, pest infestations, and diseases.
Dr Zafar pointed out that insufficient funding for cotton research has hindered efforts to develop resilient cotton varieties and increase yields. He concluded by emphasizing that Pakistan can revive its cotton industry by ensuring fair prices for farmers and prioritizing research and development.
Moreover, due to high energy and financial costs, cotton production in the country is expected to decline in 2024-25, the Ministry of National Food Security and Research (MNFS&R) told a parliamentary body on Friday.
The National Assembly’s Standing Committee on National Food Security and Research, chaired by MNA Syed Hussain Tariq, was informed by MNFS&R that cotton production in the country is expected to decline in 2024-25 due to high energy and financial costs, which will affect the textile sector. The government has set a target of $25 billion for textile exports in 2023-24, but exports are expected to fall short of this target, according to a brief presented by MNFS&R to the committee.
The committee expressed severe concerns over the continuous decline in cotton production and prices in the country. Its members emphasised the urgent need for effective measures to stabilise and increase cotton production, including subsidies, better pest control measures, and adoption of modern farming techniques. During the meeting, a detailed discussion was held on the current challenges and administrative issues faced by the Pakistan Central Cotton Committee (PCCC). The discussion focused on the inefficiencies within the current operational protocol, bureaucratic hurdles, and the need to enhance resource management. The committee stressed the need for strategic restructuring of PCCC’s organisational structure and operations.
Furthermore, the committee held comprehensive talks on the outstanding issues between PCCC and the All Pakistan Textile Mills Association (APTMA).
A representative of the association told the committee that a tax of Rs 2000 per maund has been imposed on ginning. They demanded that the government lift the ban on GM cotton. The APTMA representative said that our core ginning and spinning industry is about to shut down. They said that imported cotton is cheaper than local cotton, adding that electricity costs 6 cents per unit in Uzbekistan and India, while in our country it costs 14 to 17 cents per unit. They said that there is no standard for cotton seeds in Pakistan.
Furthermore, the Crop Reporting Service Wing of the Punjab Agriculture Department has released the production data for cotton up to August 16, 2024. According to the report, cotton production in Punjab province has reached six lac and thirty six thousand bales
During the same period last year, cotton production was seven lac and eighty nine thousand bales. The current season’s cotton production is 19.4% lower than the same period last year. The average weight of cotton bolls has been recorded at 3.46 grams, which was 3.43 grams in 2022-23. There has been a 0.87% increase in the average weight of cotton bolls. So far, 40% of the cotton area has been harvested, which was 52% during the same period last year. The Punjab Agriculture Department will release the next provisional data for cotton on August 31.
Copyright Business Recorder, 2024