Pakistan has witnessed a 62 percent surge in cotton production, reaching 5.99 million bales during the initial three and a half months of the current season.
However, recent weeks have seen a slowdown in production.
The setback is attributed to a white fly attack, particularly prevalent in the South Punjab cotton region. According to the latest fortnightly cotton arrival report from the Pakistan Cotton Ginners Association, the current output stands at 3.70 million bales, reflecting a considerable increase from the same period last year.
Muhammad Asim Saeed, Vice President of the Multan Chamber of Commerce and Industry (MCCI) and Former Vice Chairman of PCGA highlighted that the revival of cotton production is attributed to the government’s introduction of a minimum purchase price, or cotton support price, set at Rs. 8,500 per 40 kg for the current season. This intervention has spurred cotton growers to expand cultivation, contributing to a boost in the overall harvest.
While the government initially estimated the current season’s cotton production to exceed 12 million bales, the white fly attack prompted a revision, bringing the estimate down to around 10 million bales. This falls short by 2 million bales compared to the country’s average annual production of 12 million bales, with the peak observed at 14.8 million bales in recent years.
Saeed pointed out a drop in cotton prices below the support level, urging the government to purchase the commodity from growers to stabilize prices around Rs. 8,500 per 40 kg. He emphasized the need to activate the Trading Corporation of Pakistan (TCP) for timely cotton purchases, as any delay could destabilize the market and erode growers’ confidence, potentially leading them to switch to more profitable crops next year.
The surge in cotton harvest has reduced the demand for imports by 5-6 million bales this season, with overall imports projected to be around 5 million bales to meet the country’s consumption requirement of 15-16 million bales.
Despite the positive development in cotton production, Pakistan’s textile exports face challenges. High inflation and increased energy prices have contributed to a decline in textile exports, with September 2023 figures showing a 6 percent month-on-month and 11 percent year-on-year decrease.
Topline Research attributed the lack of energy supply to increased electricity rates, higher interest rates, and exchange rate fluctuations as the prime reasons for the decline in textile exports. In the first quarter of FY24 (Jul-Sept), overall textile exports dropped by 10% to $4.1 billion compared to the same period last year.
Looking ahead, the rise in cotton exports is anticipated in the coming months due to favorable weather conditions. However, challenges persist, including elevated energy costs, a shortage of gas, and the broader impact of the global economic slowdown.