Cotton production drops 35.81pc YoY till Feb 1

February 04, 2023

LAHORE/KARACHI: Pakistan’s cotton shortage has become a significant concern for the textile industry as stockpiling of bales declined 36 percent till February 1, 2023, with Sindh emerging as...

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LAHORE/KARACHI: Pakistan’s cotton shortage has become a significant concern for the textile industry as stockpiling of bales declined 36 percent till February 1, 2023, with Sindh emerging as the worst hit.

Stockpiling at ginning factories dropped to a mere 4.763 million cotton bales against last year’s 7.420 million bales, showing a steep decline of 2.657 million bales or 35.81 percent till February 1, 2023.

According to the fortnightly cotton report of the Pakistan Cotton Ginners Association (PCGA), textile mills bought nearly 4.175 million bales to date to meet such a large shortfall, which has been attributed to floods in Sindh, Balochistan and South Punjab.

Karachi Cotton Brokers Association (KCBA) Chairman Naseem Usman said that following monsoon rains, floods hit the standing crop in Sindh. “As a result, by January 31, cotton arrivals in Sindh were recorded at 1.870 million bales, a decrease of 46.74 percent compared to last year's 3.512 million bales by the same time,” he added.

As a result of the devastation caused by the monsoon floods, an estimated 8-10 million bales would have to be imported to keep the textile sector spinning. Of these, deals have already been made for around 5.6 million bales.

However, a shortage of dollars could aggravate the troubles of the textile sector and consequently the country’s economy as well due to textiles being its export-mainstay.

Cotton arrivals from Punjab, the biggest producer of the silver fibre, reduced to 2.893 million bales, down 25.98 percent, while cotton arrivals from Sindh declined by a staggering 46.74 percent to 1.861 million bales against last year’s quantity of 3.512 million bales.

The cotton belts of Sindh, comprising districts of Hyderabad, Mirpur Khas, Sanghar, Nawabshah, Naushero Feroze, Khairpur, Ghotki, Sukkur and Dadu were the worst hit, while in Punjab the most affected areas include Multan, Lodhran, Muzaffar Garh, Dera Ghazi Khan, Rajanpur, Layyah, Rahim Yar Khan, Bahawalpur and Bahawalnagar.

Some cotton areas in Rojhan, Fazilpur, and Jampur also bore the brunt of floods in South Punjab, while some losses were avoided in the region due to better drainage of floodwater.

However, losses in Sindh were as high as 70-80 percent in some districts. Settlements on banks of water channels and clogged drains and waterways have been cited as some reasons behind the grave losses in Sindh, which resulted in inflicting losses worth billions of rupees to the standing crop.

A sole encouraging trend in the latest figures has been healthy inflow of cotton on monthly bases. This year's monthly flow of cotton stood at 0.150 million bales against last year’s arrival of 0.0735 million bales.

Keeping in view dearth of raw material for the industry, the All Pakistan Textile Mills Association (APTMA) sought direct intervention of Federal Minister for Finance and Revenue Ishaq Dar as banks were not opening letters of credit for the import of cotton.

In a letter dated January 12, addressed to the finance minister, APTMA said that the cotton crop for this year clocked in at under 5 million bales, which was significantly lower than the 15 million bales demand of the textile sector.

This indicated that approximately 10 million bales should be imported to retain exports at last year’s level of $19.3 billion.

“Unfortunately, import of cotton has been severely restricted,” read the letter. “Banks are not opening LCs or retiring cotton imports. The industry is running out of cotton stocks and as a consequence, our mills have either shut down or will shut down in the near future if decisive and urgent action is not taken.”

The association shared that banks were only willing to entertain very small and limited LCs for companies which were direct exporters. “This excludes 80 percent of the basic industry and ignores the fragmented structure of the industry. “It is absolutely essential that the raw material (cotton) be available to the entire sector so that the sector which exports 80 percent of its product does not come to a standstill,” it said.

KCBA Chairman Usman said that efforts were also needed to increase cotton production on an urgent basis. If that was done, and cotton production went beyond 8 million bales, “the results would be visible in the next few years and the economy will become more stable”.

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