Cotton crisis

Pakistan’s cotton woes are unlikely to end any time soon. After revelations that cotton production in the country shrunk by over 30 percent last year, cotton prices have reached an 18-month high. And the All Pakistan Textile Mills Association (APTMA) has been up in arms about government plans to impose an import duty on Indian cotton. The Senate Standing Committee on National Food Security has apparently made the recommendation on the grounds that it would boost the crumbling local cotton production. APTMA instead claims that Indian cotton is better quality, and the failure is one of doing the correct research at Pakistan’s end. Our cotton imports are at an all-time high of four million bales compared to 1.2 million bales imported a year ago. Last year, cotton production was a mere 9.7 million bales compared to a demand of 14 million bales. This year, the government is predicting 14.1 million bales of production, but unfavourable conditions during this monsoon are likely to prove that the target is much more ambitious than what the actual outcome will be. Our cotton problem has many dimensions, but the government has chosen to focus on only one of them on an international forum.

At the World Trade Organization, Pakistan has raised the issue of cotton subsidies given by big cotton producers, such as India and the US. The government has claimed that these cotton subsidies make Pakistani cotton uncompetitive in the global market. The position is correct in principle, but the issue of subsidies has been raised before the WTO by other countries too in the past. The WTO is unlikely to take action against any countries offering cotton subsidies, which makes Pakistan’s so-called principled stand one that is to the detriment to local cotton producers. Instead, Pakistan could choose to subsidise its own cotton producers in line with the US and Indian subsidies to make its cotton competitive. Our claim is not wrong. Global subsidies in the cotton sector reached a record $10.4 billion last year with 76 percent of global cotton production being subsidised. The WTO stands as the beacon carrier of free market trade. But its principles are only applied to smaller economies, whereas it possesses little capability or will to take on truly global powers in any economic sector. Cotton is certainly integral to Pakistan’s economy. We agree with the government on this. This is exactly why we cannot turn to the WTO. Instead, we must begin by doing more for our cotton farmers. Does that mean imposing a duty on Indian cotton? Perhaps it does. But this will require a carefully orchestrated economic calculus that balances the needs of cotton producers and cotton ginners. It is only a partial truth to say that Pakistan has been forced to become a cotton importer. Many of the failures are local and must be locally addressed. We can ignore the WTO when the health of our farmers is at stake.