‘White gold’ under black shadows

Textile sector of Pakistan is facing many internal and external challenges including energy affordability and availability, current account deficit, shortage of raw material, credit availability, lack of institutional support, infrastructure constraints, skill development institutes, perception management, market access, GSP plus status continuation, sustainable supply chain, BCI cotton, water footprints reduction, social standards compliance and last but not least compliance linked with SDGs and the WTO rules.

On the Cotton front, it is not only an essential segment of economic strategy but has social dimensions as even the farmers' schedules of social activities which are dependent on expected cash flows from the value chain. Cotton as the basic raw material for the Pakistan textile industry accounts for almost 70% of the basic cost of production in the textile industry and any movements in price or quantity have significant impacts.

Cotton crop variety, quality and production witnessed a diminishing trend over the last few years. A decrease in cotton acreage, per hectare yield and imprudent government policies, have taken a heavy toll on cotton production. According to the Pakistan Central Cotton Committee's (PCCC's) report, cotton production target has been missed by 23 percent for the year 2019. Over the last five years, cotton production has decreased from 13.86 million bales to 10.84 million bales, witnessing a decrease of 22pc which has caused a huge loss to the economy. The shortfall requirement of the industry is 15.5 million bales and hence 5 million bales are short.

The cotton produced in Pakistan is of average quality with short fibre length (10-25 mm length) which cannot be used for producing high-end products required for exports. In Baluchistan, production of long staple length of cotton is expected and more areas are required to be exploited. Mostly, long staple length cotton is imported from Brazil, Egypt, Greece, Turkmenistan, the US, India, and Spain.

Currently, the cotton crop is suffering from the encroachment of land (sugarcane encroached best cotton growing area), poor quality seed, cotton leaf curl virus (CLCV), pest management issue, lack of plant resistant seeds, depleted technology, late sowing and the severe shortage of water. There are 24 well-known pests and diseases of the cotton crop in the world, Pakistan has 22 of them. There is no adequate pest and disease control mechanism available in Pakistan to bar impact and spread of pest attack. Reasons for low quality and production include old technology, low-quality seed, changing weather conditions, low-quality pesticides, and high prices of competing crops.

Despite the shortage of raw cotton, every year government impose Customs duty (3%), additional customs duty (2%), and sales tax (5%) on the import of cotton from July to January and lifts the ban for the rest of the year. The production shortfall forces the entire value chain to rely on imported cotton to meet the shortfall and to get export-quality cotton.

On the basis of issues, a detail way forward is suggest as follows:

There is a dire need to improve cotton quality by controlling contamination and trash content through enforcement of the standards laid down in the Cotton Control Act and Cotton Standardization Ordinance. Pakistani ginned bales contain up to 10% trash, world averages 2 to 3 percent. Encroachment of crops in cotton growing areas shall be curtailed through the adoption of appropriate policy changes in sugarcane pricing and cropping patterns. The land under sugarcane cultivation is 1,217,000 hectares while under cotton, it is 2,489,000 hectares; wheat is produced on 9,052,000 hectares. If we revert even half area (608,000 hectares) under sugarcane production with the help of corrective measures of the government which restrict its cultivation area, this area with cotton cultivation will add an additional 0.25 percent to GDP, along with minimum 1.273% of additional wheat contribution to GDP per annum. Most of the sugar mills have doubled the extension beyond the sanctioned capacity. Therefore, unsanctioned enhanced capacities should be cut back. Zoning laws for crops may be enforced strictly.

-- The government of Pakistan should ensure import of best quality seed and its availability at affordable prices to farmers. A package deal should be negotiated with Monsanto to ensure better quality seed availability for farmers.

-- A comprehensive training and capacity building program shall be developed to establish a system in the private sector for grading and classifying cotton. Incentives shall be provided to ensure that proper premiums are paid for increased production of contamination-free graded cotton. Labelling of cotton bales with trash content, moisture content and weight of cotton bale should be made mandatory.

-- Measures shall be introduced for production of long-staple cotton for value-added products and to meet domestic demand for high-quality fabrics, including the introduction of BT cotton on priority basis. Trained staff from relevant government department should carry out training sessions, provide farmers with information about soil analysis, crop management, weather and other means to get better yield.

-- On the other side, Pakistan Central Cotton Committee (PCCC) has totally failed to launch new seed qualities due to lack of dedicated and sustained research. Pakistan's average cotton yield is 17 maunds whereas progressive farmers are getting 40 maunds yield in Pakistan. PCCC is required to ensure availability of cotton to the industry at reasonable prices throughout the year and develop such varieties of cotton seeds that are resistant to diseases and enhance per acre cotton yield.

The industry requirement is increasing with each passing year but indigenous production of cotton is further decreasing. It would be difficult for the textile industry to compete with textile giants like China, India, Bangladesh and Vietnam when we have to import a larger amount of expensive cotton to meet the shortfall of our cotton requirements. Promotion of cotton means the promotion of exports while the failure of cotton crop translates into heavy damage to the country's economy. It is mandatory to increase the cotton production to 15 million bales within the next 2 years and 20 million bales in the next 5 years.

Pakistan: cotton area, production & yield

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PERIOD     AREA '000' HECTARES    PRODUCTION 000' BALES OF 170 KG   YIELD KGS PER HECTARE

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         Sindh   Punjab   Total   Sindh   Punjab    Total   Sindh          Punjab   Total

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2014-15    596    2,323   2,919   3,573   10,277   13,850   1,019             752     807

2015-16    621    2,243   2,864   3,766    6,002    9,768   1,031             455     580

2016-17    637    1,815   2,452   3,597    6,978   10,575     960             653     733

2017-18    612    2,053   2,700   3,775    8,077   11,946    1049             669     752

2018-19    394     2290   2,684   2,600    8,077   10,847    1122             600     687

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SOURCE: TCO/PCCC/PBS