KARACHI: The cotton cultivation area has dropped sharply in both the cotton-producing provinces, creating fear of a major decline in production, which has pushed up the initial cotton trading price to an 11-year high.
The country is unlikely to achieve the target of 10.5 million bales set for this season which has just started. The previous season, which ended in March 2021, could hardly produce 5.6m bales against the target of 11m bales set by the government.
The country would have to import cotton worth $2 billion to $3bn. This huge import would practically neutralise the impact of higher textile exports which have the support of the government and the State Bank.
“The reports reaching here from Punjab and Sindh show that the area of cultivation has been reduced by more than 20 per cent which means we can’t reach the production target of 10.5m bales this year,” chairman of the Pakistan Cotton Ginners Association Dr Jasomal told the media on Saturday.
He said the area under cultivation in Punjab had dropped to 3.2m acres against the target of 4m acres while in Sindh the area was not more than 1.2m acres against the target of 1.6m acres.
He said one-third of the ginning mills had remained closed during the previous years due to very low cotton production. Out of 1,300 ginning mills, only 442 were fully or partially functional, Dr Jasomal added.
“The fear of shortage has already increased cotton prices in the local market. The highest price — Rs14,000 per bale — was witnessed on Thursday which is an 11-year high,” said Nasim Usman, chairman of the Karachi Cotton Brokers Forum.
He said the local cotton prices were much higher than the international prices, creating space for more cotton import this year that would cost heavily to a country struggling to reduce the trade deficit.
The recovery of the Indian textile sector is visible from cotton import by India from the US. India has imported 42,300 bales of US cotton this year so far which means Pakistani textile exporters, who enjoyed free space in the absence of India due to Covid-19 and succeeded in booking large orders, would face tough competition in the next few months.