KARACHI: Local cotton prices have seen a significant increase, according to industry sources. While the market experiences a limited trading volume, a majority of transactions is currently conducted on credit. However, the New York cotton market is witnessing a downturn.
Expressing concerns over the impact of excessive taxes on cotton production, Chairman Agriculture Taskforce Sham Lal Manglani has called for early sowing of cotton and exemption from taxes for local produce. He emphasised the need for concerted efforts to revive the cotton industry.
The Federal Board of Revenue (FBR) is scheduled to convene a meeting on January 13th to discuss the issue of Sales Tax (ST) on cotton.
According to the International Cotton Advisory Committee (ICAC), global cotton production is on the rise. However, Pakistan’s cotton industry is facing several challenges, including low domestic production and delays in cotton imports.
Cotton prices in the local market have witnessed a significant increase over the past week, with prices varying based on quality and payment terms. Textile spinners, facing pressure from ginners demanding higher prices, are exercising caution in their purchases, opting to buy only when absolutely necessary.
According to market sources, most transactions are currently being conducted on credit. Prices for cotton are currently ranging between Rs. 18,000 and Rs. 20,000 per maund, depending on quality and payment terms.
Large textile groups are increasingly looking towards imported cotton, attracted by its superior quality, favourable payment terms, and the tax exemptions available under the Export Finance Scheme.
Local cotton growers and ginners are staging continuous protests against the government’s alleged favouritism towards the imported cotton, yarn, and cloth at the cost of local production. The crux of their grievance lies in the government’s provision of Export Finance Scheme (EFS) incentives to the imported goods while neglecting the local cotton industry.
The All Pakistan Textile Mills Association (APTMA) has been demanding the extension of EFS benefits to locally produced cotton, but their pleas have been consistently ignored by relevant authorities. Growers and ginners argue that the current policy to support cotton import into the country is detrimental to their livelihoods. They contend that by incentivizing imports, the government is effectively undermining the local cotton industry and discouraging domestic production. They are urging the government to reconsider its pro-import stance and prioritise the interests of local cotton growers and ginners by extending the EFS facility to the locally produced cotton.
Cotton prices in Pakistan have witnessed a significant increase, with variations across provinces based on quality and payment terms. In Sindh, cotton is currently priced between Rs. 18,000 to Rs. 20,000 per maund, while Phutti is trading between Rs. 7,800 to Rs. 8,800 per 40 kilograms. Punjab is seeing similar trends, with cotton prices ranging from Rs. 18,500 to Rs. 20,000 per maund and Phutti prices between Rs. 8,000 to Rs. 10,500 per 40 kilograms.
The rate of cotton in Balochistan is in between Rs. 18,000 to Rs. 19,000 per maund and the rate of Phutti is in between Rs. 7,700 to Rs. 9,500 per 40 kilograms. Notably, the rate of Balochi cotton is in between Rs. 19,000 to Rs. 19,500 per maund, while the rate of PRIMARK cotton is in between Rs. 20,000 to Rs. 20,500 per maund. The prices of Banola, oil, and Khal; however, have remained relatively stable.
The Karachi Cotton Association’s spot rate committee has recently increased the spot rate by Rs 500 per maund, setting it at Rs. 18,500 per maund.
International cotton prices have been trending downwards, according to Nasim Usman, Chairman of the Karachi Cotton Brokers Forum. The New York cotton price remained within a range of 67.50 to 68.50 US cents per pound.
The US Department of Agriculture’s (USDA) weekly export sales report revealed that 137,400 bales of cotton were sold for the 2024-25 marketing year. Turkey emerged as the leading buyer, purchasing 62,000 bales. Pakistan followed closely, securing 25,500 bales. Vietnam was on number three with 21,500 bales purchased.
Exports for the period totalled 2,000 bales, all of which were imported by China.
Secretary of Agriculture Punjab Iftikhar Ali Sahoo has stated that the economy of the country is inextricably linked to cotton. He announced that an awareness campaign will be launched to promote cotton cultivation and ensure timely sowing. Furthermore, an awareness campaign will be initiated to encourage the cultivation of high-yielding cotton varieties on vacant lands.
In the latest update, the International Cotton Advisory Committee (ICAC) has increased its global cotton production forecast for 2024/25 to 25.3629 million tons. This upward revision from the previous month’s estimate of 25.2990 million tons reflects a year-on-year increase of 5.1% compared to the 2023/24 estimate of 24.1230 million tons.
Sham Lal Mangalani Chairman Taskforce on Agriculture for FPCCI and Executive Committee Member PCGA participated in high level meetings held in Islamabad regarding cotton in which AG Azhar Waqas from SIFC, General Shahid Nazir and other senior officials were present. In the meeting, cotton revival, as well as, its importance was also discussed.
Mangalani said that with good and high production of cotton, we can not only increase our exports but also reduce unemployment in the country. Despite the numerous benefits of cotton, taxes have been high on it. Due to which the ginning industry connected with it is also suffering a lot. The meeting unanimously agreed that cotton is not only the backbone of our country’s economy, but it is the only crop whose production will increase the country’s prosperity. However, the officials said that efforts will be made to provide land for cultivation of cotton and crackdown on bogus seed companies because seed will be launched.
Later in the FPCCI meeting, it was also emphasised that the sales tax on cotton and all its by-products should be abolished so that its production can increase and the farmers get better compensation. Cotton is a cash crop and it is the only crop that provides employment to hundreds of thousands of people. The country is already going through a critical period and the 18% sales tax on cotton and its by-products should be removed immediately to increase cotton production and strengthen the country’s economy.
In the FPCCI meeting, former Prime Minister Anwarul Haq Kakar, former Commerce Minister Gohar Ijaz, Patron-in-Chief FPCCISM Tanveer, Secretary Agriculture Punjab Iftikhar Sahoo, Chairman Aptama Kamran Arshad, Chairman Advisory Board FPCCI. I Mian Zahid Hussain, Shehzad Ali Malik, Javed Ahmad Qureshi and other members participated and pledged to play their role for the revival of cotton and put the country on the path of development.
However, Pakistan’s textile exports witnessed a robust growth of 10% during the first half of the fiscal year 2025, reaching a commendable $9.09 billion. However, this positive trend is overshadowed by a significant surge in cotton prices, posing a challenge to the industry.
According to industry sources, cotton prices have skyrocketed due to a confluence of factors, including a delay in imported cotton shipments, a sharp decline in domestic cotton production, and a surge in export orders.
Cotton prices reached a record high of Rs. 20,000 per maund in the cotton year of 2024- 25.
The Federal Board of Revenue (FBR) is scheduled to convene a special meeting on January 13th to deliberate on the critical issue of extending or withdrawing the sales tax exemption on imported cotton and yarn.
Ehsan Haq, Chairman of the Cotton Ginners Forum, has said that most of the cotton procured by importers under previously signed contracts has already arrived in Pakistan. However, cotton purchased under recent agreements is anticipated to arrive between March and May. This has spurred a record increase in domestic cotton purchases by textile mills, further exacerbating the price surge.
The Pakistani cotton industry is currently facing significant challenges, experts warn. Despite numerous initiatives undertaken by both government and private entities to boost cotton production, progress remains stagnant due to a lack of coordination and cooperation among key stakeholders.
This fragmented approach has yielded minimal results, and without a unified strategy, the industry’s decline continues unabated.
Experts emphasise the urgent need to address the underlying issues and develop a comprehensive, systemic approach to revitalize the cotton sector.
The industry possesses immense potential for growth and revival; however, this can only be achieved through collective efforts and collaboration.
Abid Zaidi from the Karachi Cotton Association (KCA) said that by prioritizing the improvement of cotton quality, addressing price disparities, and enhancing the competitiveness of Pakistani cotton in the global market, the industry can reclaim its former prominence.
A unified vision, rooted in a shared commitment to quality and sustainability, is crucial for achieving sustained growth in cotton production, re-establishing Pakistan’s position in the global textile industry, and ultimately contributing to the country’s economic development.
The Head of the Technology Transfer Department at the Central Cotton Research Institute, Multan, Mr. Sajid Mahmood, in a discussion with renowned cotton analyst Mr. Naseem Usman, announced that the Pakistan Central Cotton Committee (PCCC) will be hosting the inaugural National Conference on Cotton Revival on February 4, 2025, in Multan.
Sajid Mahmood highlighted that this landmark event is being organized in collaboration with Cotton Connect and enjoys the support of leading private sector entities, including Tara Group and Fatima Fertilizer. The primary objective of the conference is to unite all stakeholders on a single platform to address the pressing challenges in cotton production and the value chain.
He further noted that the conference will feature special participation from Dr. Eric, Executive Director of the International Cotton Advisory Committee (ICAC), and Kanwar Usman, ICAC Director of Textiles. Their involvement will help foster constructive dialogue between government representatives, research institutions, the textile industry, and other key sectors to develop actionable strategies for cotton revival in Pakistan.
The Karachi Cotton Association (KCA) successfully concluded a week-long training program on “Cotton Ginning” from January 6th to 10th, 2025, at its premises. The training aimed to equip participants with a foundational understanding of the cotton ginning process.
A substantial number of individuals representing various sectors of the cotton trade actively participated in the program. A qualified instructor delivered comprehensive lectures on key aspects of the cotton ginning process. To enhance practical learning, the KCA organized a field visit to a ginning factory, allowing participants to observe the process firsthand.
On January 10th, 2025, at a dedicated ceremony held at the KCA, certificates were presented to all participants who successfully completed the training. The event was graced by the presence of esteemed dignitaries, including Khwaja M Zubair, Chairman of the KCA, Khwaja Tahir Mahmud, Former Chairman of the KCA, Rizwan Iqbal Umar, Former Vice Chairman of the KCA, and Muhammad Nasim Usman, Senior Member of the Brokers Advisory Committee
of the KCA.
Copyright Business Recorder, 2025