Pakistan’s Cotton Production Hits 40-Year Low

The country has produced 34 percent less cotton this year as compared with the crop yield last season, reveals data from Pakistan Cotton Gin­ners Association (PCGA).

The final data for the crop year 2022–2023 reveal that Pakistan generated 4,912,069 bales of cotton, the lowest amount in about four decades, compared to 7,441,833 bales during the 2021–2022 season, a decrease of 2,528,764 bales or 34%.

The textile industry will need to import about 10 million bales to meet its yearly demand of 15 million bales. However, mill consumption has also been projected to fall to 8.8 million bales in 2022–2023, the lowest level in more than 20 years. This is largely because of significant issues with import funding.

According to market sources, the textile factories have signed import agreements for 5.5 million bales, even though they have only purchased 4,605,449 bales from the local market thus far. The factories bought 7,332,000 bales from the neighbourhood market last year.

Ginners say that they still have 301,720 bales in storage, compared to a 93,833 bale inventory from the previous year.

Flash floods and torrential rains that devastated a lot of the country's agricultural land during the previous monsoon, particularly in the provinces of Sindh and Balochistan, are blamed for the drastic decrease in cotton arrival.

Interestingly, despite high demand in foreign markets, only 4,900 bales of white lint were able to be exported this year as opposed to 11,000 bales the year before, a decline of over 69 percent. Cotton that has not been processed is mainly shipped from Pakistan to the Philippines, Italy, Bangladesh, Greece, and France.

With respect to provincial production, Punjab saw a drop of more than 32% from the prior season, generating 3,033,050 bales this season as opposed to 3,928,690 bales the year before.

The province of Sindh recorded a yield loss of over 46% year over year as lint production this year was 1,879,019 bales compared to 3,513,143 bales last year.

The production of cotton in Pakistan peaked at 14.1 million bundles in the 2004–2005 crop year. However, as the country’s per acre yield decreased to half of the crop productivity in other countries in the area, it fell to 7 million bales in 2020–21 and about 9.45 million bales in 2021–22.

A recent meeting of the Economic Coordination Committee (ECC) approved Rs8,500 per 40kg as the intervention price on a summary provided by the Ministry of National Food Security and Research to entice growers towards the crop. The ECC expressed concern over the continuing decrease in cotton production and acreage over the years.

Pricing

The ministry told the ECC that meetings with all interested parties, including the provincial governments, growers, and cotton associations, were conducted in January and February in order to develop a cotton intervention price proposal.

Stakeholders advocated for tying the cotton intervention price to the import parity price in accordance with the strategy implemented over the previous two years, including the All Pakistan Textile Mills Association.

The ECC constituted a cotton price review committee with the mandate to review market prices and propose intervention on a fortnightly basis.