Country’s current cotton woes

The current cotton arrival estimates fall far short of ful lling domestic requirement of the textile industry. The share of cotton crop in agricultural GDP is 4.5 percent while its share in national GDP is 1 percent. Cotton being the basic raw material for the Pakistan's textile industry accounts for almost 70% of the basic cost and therefore any movement in price or quantity of cotton has signi cant impacts on production and the farmer's revenue. According to a PCCC report, the cotton production has witnessed a decrease of 32 percent for the year 2019-20 which has caused a loss of more than 2 percent of the GDP to the economy for this year alone. The importance of the textile industry can be assessed from the fact that it is contributing $ 13.3 billion in exports (60 percent of total exports), 8.5 percent in GDP and employs over 10 million people with many more dependents in 2018-19.

Imprudent policies by successive governments have taken a heavy toll on cotton production and resulted in progressive decrease of cotton acreage and yield per hectare. Cotton production target set for this year by the Ministry of Food Security/PCCC was 15 million bales but necessary measures were not taken to achieve the target and as a result only 9-10 million bales are expected this year.

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                       Crop                                      Crop water                             Average CWR

                                                                          Requirement (CWR)              (mm)

                                                                          range (mm)

                                                                          North (temperate)

                                                                          South (arid)

                  =================================================================

1

Wheat

290-520

402

2

Cotton

587-1000

714

3

sugarcane

1000-1900

1512

4

Rice

540-1156

931

5

Maize

244-450

435

6

Fruit

900-2200

1120

7

Sorghum

370-530

332

8

Fruit

700-2200

1120

9

Pulses/oil seeds

300-500

332

10

Vegetables/fodde

450-650

530

                     ===================================================

In a recent meeting on crop assessment, Sindh reported a drop of 30% in the expected cotton crop while Punjab reported a drop of 15% over last year's production. The cotton crop has witnessed a decrease of 29 percent in its yield since FY12. The principal reason of low yield this year is the low number of plants per acre (need to increase 50 percent more plants per acre). A recent study reveals that the yield in Punjab will record a historic low this season.

The expected requirement of cotton bales by industry is more than 15 million and hence 5 million are short. The production shortage forces the entire value chain to rely on imported cotton to meet the shortfall substantially increasing the import bill and negatively impacting the competitiveness of our exports. One of the many things that is likely to reduce our net exports this year.

Other reasons behind reduction in cotton output include unavailability of quality seed, pest resistant seed, outdated technology, water shortage, low proRtability and lack of awareness of farmers regarding cotton production as well as competing crops and government policies or the lack thereof.

One major reason behind diminishing cotton crop is sugarcane which has cropped up in the best cotton sowing area. From FY10 to FY18, the area of sugarcane crop has increased from 0.94 million hectares to 1.34 million hectares up by 42 percent. Similarly, the increase in area of Punjab and Sindh is 42 percent and 43 percent respectively. This encroachment is primarily due to the protection provided by the government for sugar as well as illegal extensions in capacity of mills already existing in the areas.

Moreover, sugarcane crop is subsidized through protective prices as a 40% customs duty on the import of sugar has been imposed. This crop has assumed the status of a “political good" like wheat in the last decade, regardless of its economic comparative disadvantage.

The target of 15 million bales of cotton could easily be achieved if strict prohibition of sugarcane crop cultivation in cotton growing area is imposed (Zoning has to be implemented and regulated). This will not only provide the raw material for country's largest manufacturing sector but will also lead to higher economic output, higher employment and increased foreign exchange earnings. The area with cotton cultivation will add an additional 0.25 percent to GDP along with minimum 1.27 percent of additional wheat contribution to GDP if half of the sugarcane production area reverted. This in short means that 1.523 percent (0.25%+1.273%) to GDP per annum can be added while letting go of 0.35 percent (half of sugarcane contribution with current area under cultivation) of sugarcane production contribution.

Another reason is the failure of cotton seed which is unproven, substandard and not resistant to pests and diseases (old generation BT cotton). The world shifted to genetically modi ed seeds and improved their cotton production and yield per acre but Pakistan still has inferior quality seed. Our cotton needs GMO transformation against pink bollworm and White y which is available with private sector and can be seen at their research farm and labs. Pink bollworm can only be controlled by GMO varieties, Pesticides cannot control it. It is a very deceptive pest at the time when it appears on the surface of crop it has already caused the damage on the crop. Every year, nearly four million bales are damaged by pink bollworm and white y. The currently available pesticides have failed to yield results on the major cotton pest i.e., White y, contrary to the claims made by various companies. This has caused White y to go beyond ETL (Economic Threshold Level) and has resulted in a complete disaster.

The average farm gate price of “Phutti" this season has been Rs 3600 per 40 kg and ginning cost is approximately Rs 700 per bale plus 7% wastage. Whereas the sale price of cotton is almost Rs 9200 per 40 kg. This huge difference in marketing and risk margin is kept by ginners and market proRteers and resultantly farmers suffer huge losses. Pakistani ginned cotton bales are underweight and contain sand, dust, threads of nylon, moisture and leaves of the cotton plant as well as up to 10% trash (2 to 3 times above world average. In short, the real sufferers are the farmers and industry in this whole game.

Pakistan is a net cotton importer for many years and textile industry has to meet the shortage by importing cotton from other countries. Afghanistan and the CAS countries are best suited to ful ll this shortfall. The ECC of the Cabinet had decided to allow import of cotton for one year from the Torkham border in its meeting held on November 2018. This import had been a big relief for the textile industry because it not only reduced the cost of imported raw material, but the quality of this cotton was superior (containing less trash and impurities) to Pakistani cotton and could be used to produce ner count yarn.

In the meeting of ECC, it was also decided that the Plant Protection Department (PPD) would construct fumigation area shed at the Torkham border and send teams to inspect the land and soil of Afghanistan and adjoining areas. Moreover, APTMA offered to arrange such visits and a committee was formed to oversee the matter. The committee has only met once during the year and the team has to verify the pest control has only just left for Afghanistan.

The government has decided to pair PCCC with the Chinese counterpart to faster development of new seed varieties. This agreement is highly unlikely to succeed as the PCCC is not properly staffed and has a legacy of unwilling and low level workers with hardly any scientists. The PCCC not only lacks basic infrastructure but hasn't been able to appoint a permanent professional as CEO to streamline the matters.

The failure of the cotton crop calls for urgent and immediate action by the government in restructuring of PCCC with the help of private sector stakeholders. The need for a long-term stable and progressive textile and cotton policy has been underscored by this disaster, inescapable if Pakistan is to progress and achieve economic stability and aggressive growth. This is a national security paradigm and should not and cannot be ignored.