Cotton output drops 33pc, threatening textile sector

LAHORE: Pakistan’s cotton output continues its downward trend, plunging by one-third compared to last year, according to the latest data released by the Pakistan Cotton Ginners Association (PCGA) on Tuesday.

As of November 30, the cotton sector faces significant challenges, including steep reductions in arrivals, inventory levels and overall supply flows. The PCGA report paints a grim picture of the country’s cotton supply chain.

Year-on-year (YoY), national cotton arrivals have dropped by 33.05 per cent, equivalent to a decline of 2.562 million bales. The total arrivals at the ginning stage for the ongoing season stand at just 5.190 million bales, a stark contrast to the 7.753 million bales recorded during the same period last year. This sharp decline signals a potential crisis that could have far-reaching implications for the nation’s textile industry and overall economy.

The reduced cotton supply has already impacted the textile sector, a major consumer of cotton. With a one-third decrease in arrivals, the industry is grappling with insufficient stock levels, sluggish supply chains, high energy costs and reduced export sales. This strain threatens to disrupt the value chain, potentially leading to higher prices or shortages. Pakistan’s position as a leading textile exporter is now at risk.

PCGA data shows that total cotton stock decreased by 29,695 bales compared to last year. In 2024, stock levels stand at 0.677 million bales, down from 0.706 million bales in 2023. The processed but unsold cotton stock, or ‘pressing in bales’, reached 0.440 million bales as of November 30, 2024.

Fortnightly cotton arrivals have also slowed, with a reduction of 86,072 bales (22.5 per cent) compared to the same period last year. In the last fortnight of November 2024, arrivals totaled 0.296 million bales, down from 0.382 million bales in the corresponding period of 2023. This decline highlights reduced market activity and could lead to greater reliance on cotton imports.

So far in 2024, 4.471 million bales have been sold to textile factories, meeting ongoing domestic demand. However, export sales have plummeted, with only 41,900 bales sold to traders and exporters. This sharp decline reflects the country’s shift towards prioritising domestic needs over exports.

Operational capacity within the sector has also declined. Only 406 ginning factories remained active in the last fortnight, compared to 515 during the same period in the previous month. Reduced cotton availability has forced factories to operate below capacity, limiting productivity and output.

Several factors have contributed to this downturn. Poor-quality seeds and inputs, high costs of fertilisers, electricity, and diesel, as well as unfavourable climatic conditions, water shortages, and pest infestations, have all played a role.

The 2024 cotton crop was severely impacted by extreme heat, unseasonal rainfall, and water scarcity in key cotton-growing regions of Sindh and Punjab. Pest and disease outbreaks further worsened the situation for farmers.

The outlook for the cotton sector depends on decisive action by policymakers, especially in Punjab. Addressing climate challenges and improving inputs will be critical to mitigating further disruptions in this vital industry, which is integral to the country’s economy.