Business

Collapse Of Pakistan Cotton Sector

Decrease in cotton acreage, per hectare yield and imprudent government policies have taken a heavy toll on Pakistan's cotton production. According to Pakistan Central Cotton Committee's (PCCC's) report, cotton production target has been missed by 15% for the year 2018.

Over the last five years, cotton production has decreased from 13.86 million bales to 11.98 million bales, witnessing a decrease of 14% which has caused a loss of Rs 535 billion (almost 2% of total GDP) to the economy. Moreover, as the sowing of cotton crop 2018-19 is in progress, only 48% crop has been sown in Sindh against the target of 0.62 million hectares whereas Punjab has achieved 95% of the target (2.31 million hectares) till June. Total sowing of the country stands at 2.494 million hectares, witnessing a decline of 8.8% over the last five years.

Apparently the main reason for the decline in cotton crop is low per hectare yield (further decreased by 6.2% over the last five years), which has left Pakistan with the only choice to import cotton to meet domestic demand.

An import duty of 11% on cotton further makes Pakistan's textile industry uncompetitive. Moreover, cotton importers are not allowed to import cotton in more than one shipment against one permit which inflates the input costs. It will also directly impact the textile and garments exports, 75% of which are cotton based.

Apart from technical and administrative challenges, climate change and irregular rainfall is also adding fuel to the fire. Farmers also blame widespread use of genetically modified Bt seeds, seeds mafia and water scarcity for low production of cotton. Farmers claim that seed mafias are posing a substantial threat to cotton crop by selling fake Bt seeds which results in a loss of 2-3 million cotton bales every year. The low toxin level (0.2-0.6 per gram) in those fake seeds and outdated Bt technology has lost its effectiveness against severe cotton diseases like cotton bollworms and other insects.

Water scarcity has also played a major role in shrinkage of cotton production. At present, farmers fear that because of severe water shortage the production of cotton may decline by 35-40% further compared to last year. Along with water and energy crisis, the enormous increase in water, gas, fuel and electricity prices have also impacted the yield per hectare.

Besides drop in production, cotton quality is also deteriorating. Against the international standard of 2.5g/bale, Pakistan produces highly contaminated cotton with an average contamination of 18g/bale which causes a monetary loss of almost US$ 1.4 billion every year.

Low Investment in cotton research is also a matter of concern. Pakistan's investment in Cotton R&D is lowest than other countries. It is financed by cotton cess collected by PCCC which has already decreased by 53% than the previous year causing a further decrease in cotton R&D. These problems need to be addressed to strengthen Pakistan's cotton sector.