Cotton Roadmap

Cotton was always considered to be a resilient and reliable lifeline of Pakistan’s economy; however, the reduction in its productivity over several years has negatively impacted the performance of entire Textiles sector. Pakistan is fifth largest cotton producer in the World and accounts for 6 percent market share in overall production.

Over the last 10 years, cotton production has shrunk by 50 percent from 14.81 million bales to under 7.5 million bales (forecast this year) and as a result Pakistan’s Textile Sector and economy has suffered considerable losses.

The production shortfall has forced the entire value chain to rely on imported cotton, to meet this shortfall with import expenditure of over 5 billion dollars (from FY16 to FY20) on cotton imports in order to meet the demands of the domestic Textile industry. The deficit for FY21 will require an additional $ 2 billion for cotton imports.

Importance of the cotton crop can be gauged from the fact that its share of agricultural GDP is 4.1 percent and in overall GDP isapproximately0.8 percent. Other bye products are Cotton seed with a significant contribution for local oil production and of cotton cake that improves milk production.

Cotton being the basic raw material for the roughly 400 textile mills of Pakistan, which earn 60 percent foreign earnings and contribute 8.5 percent in GDP; accounts for almost 70 percent of the basic cost and therefore any movement in price or quantity of cotton has significant impacts on production and the farmer’s revenue. Farmers’ decisions are subject to the relative cost of production from the competing crops, government support and input availability.

Importance of new seed technology can be assessed from the fact that Pakistan is losing at least $2 billion directly and at least $8 billion USD per annum on account of low production of cotton. Increase in cotton production will have a direct impact of $ 1 billion per 1 million bales and a 7 times multiplier impact on the fiscal flows in economy. A normal cotton crop provides livelihood and employment to millions of the poor families and goes a long way in the struggle to fight off poverty as it distributes money against the very poor rural population.

The low profitability of cotton farmers is entirely due to the falling productivity as cotton in Pakistan is already priced at levels above international parity.

Currently, international cotton price is 71.29 cents per pound whereas domestic price is 76.85 cents per pound. Last year, the cotton price in Pakistan at this point in time was approximately Rs 9400 per maund while today it is about 10,500 per maund. This shows that this year local prices as compared to previous years are substantially higher with same quality cotton. It is pertinent to note that the varieties of American, Brazilian, Mexican and Argentinian cotton offer better quality with far lower contamination and are cheaper than the Pakistani cotton.

Overall cotton area in this decade has declined by 28 percent from 3.07 million hectares to 2.22 million hectares. Almost 1.5 million farmers grow cotton out of which 75 percent is grown in Punjab while rest is grown in Sindh. From FY10, cotton area in Punjab has declined by 37 percent (from 2.44 million hectares to 1.55 million hectares) whereas cotton consumption has increased manifolds.

Measure of agricultural productivity is yield per hectare. Pakistan’s cotton yield of 577 kgs per hectare whereas Brazil is getting a yield of 1660 kgs/hectare. Central Asian countries like Uzbekistan and Turkmenistan are getting a yield of 1100 to 1200 kgs per hectare, China is getting 1826 kgs per hectare and America has crossed the mark of 1000 kgs per hectare. In Pakistan, Cotton yields have fallen by 35 percent (historic low) from 880 kgs/hectare to 577 kgs/ hectare over the last 10 years.

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Table 1: International Cotton Yield Comparison

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Country                                              Yield (Kgs per Hectares)

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Brazil                                                               1660

Uzbekistan/Turkmenistan                               1100-1200

China                                                              1826

Turkey                                                             1597

United States                                                  1018

Pakistan                                                          577

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*Indian Cotton Yield is not comparable as all its cotton is grown inrainfed areas.

The reasons for low productivity, decline in cotton area, decrease in yield and other related issues along with policy recommendations are as follows:

1. Cotton Seed

Failure of cotton seed which is unproven, substandard and not resistant to pests and diseases (old generation unlicensed BT cotton). The World has shifted to genetically modified seeds and improved cotton production and yield per acre but Pakistan still does not have quality seed.

Recommendations:

• Introduction of improved, genetically modified and certified seed.

• Facilitation of the import and commercialization of the double or triple gene.

• Promotion of private sector participation.

• Establish Joint Ventures with International Seed Companies.

• Strengthening Seed Certification Institutions at the Federal Level.

a) Introducing International Transgenic Varieties

• Facilitate entry of international seed companies with transgenic technologies into the Pakistani market.

• As a result, in future, Pakistan will be a recipient of international research pipeline where new technologies / varieties can be introduced through a formal process.

• In the meantime, to bridge the 4-5-year gap arrange fast track locally developed transgenic varieties for commercialization.

b) Fast Track Adoption of Local Varieties

Approval process of transgenic varieties for commercialization

• National bio-safety committee of the M/o Climate Change to meet urgently to evaluate and approve.

• Followed by immediate approval of variety by Provincial seed councils.

2. Staple Length

a) Short to Medium Staple

The cotton available in Pakistan is of average quality with short fibre length (10-25 mm length) which cannot be used for producing high-end products required for exports. Moreover, Pakistan imports the short to medium staple cotton from Afghanistan, Brazil, Egypt, India, Spain, China, Turkmenistan, USA etc.

b) Long and Extra Long Staple Cotton

In Baluchistan, long staple length of cotton is expected and more areas are required to be exploited. Mostly, long staple length cotton is imported from Brazil, Egypt, Greece, Turkmenistan, USA, India, and Spain etc.

Recommendations:

• Measures shall be introduced for production of long staple cotton for value added products and to meet domestic demand for high quality fabrics, including introduction of BT cotton on priority basis.

3. Pesticides and availability of latest technology

There are 24 well-known pests and diseases of the cotton crop in the world, Pakistan has 22 of them, and around 1992 almost all diseases of the cotton crop were present in Pakistan. Among them, Pink ballworm is a very deceptive pest, at the time when it appears on the surface of crop it has already made the damage to the crop. Every year, nearly four million bales are damaged by pink bollworm and white fly. The currently available pesticides have failed to yield results on the major cotton pest i.e. Whitefly, contrary to the claims made by various companies. This has caused Whitefly to go beyond ETL (Economic Threshold Level) and has resulted in a complete disaster.

Moreover, the cotton crop is suffering from cotton leaf curl virus (CLCV), pest management issue, depleted technology, changing weather conditions, low-quality pesticides, and high prices of competing crops. There is no adequate pest and disease control mechanism available in Pakistan to bar impact and spread of pest attack.

Recommendations:

• The government needs to take measures on an emergency basis in cotton research areas, i.e., variety besides high productivity and desirable fibre traits.

• Selling Intellectual Property Rights

* PCCC has no substantial output despite having extensive research institutes and hence research must be outsourced and redundant organizations restructured or closed.

4. Encroachment of Best Cotton Crop Area

One major reason behind the decline of cotton is sugarcane which has cropped up in the best cotton sowing area. From FY10 to FY18, the area of sugarcane crop has increased from 0.94 million hectares to 1.34 million hectares up by 42 percent. Similarly, the increase in area of Punjab and Sindh is 42 percent and 43 percent, respectively. This encroachment is primarily due to the protection provided by the government for sugar as well as illegal extensions in capacity of mills already existing in the areas.

Moreover, sugarcane crop is subsidized through protective prices as a 40% customs duty on the import of sugar has been imposed. This crop has assumed the status of a “political good” like wheat in the last decade, regardless of its economic comparative disadvantage.

This area with cotton cultivation will add an additional 0.25 percent to GDP along with minimum 1.27 percent of additional wheat contribution to GDP if half of the sugarcane production area is reverted. This in short means that 1.523 percent (0.25%+1.273%) to GDP per annum can be added).

Recommendations:

• Targeted input and production subsidy to farmers farming up to 5 and 10 hectares.

• Production subsidy would ensure farmers’ profits, maintaining market driven prices at same time.

5. Contamination

Pakistani ginned cotton contains sand, dust, threads of nylon and leaves of the cotton plant. Ginners must work on the exclusion of contamination according to international standards. On the other side, almost all imported cotton is contamination free.

Contamination in hand-picked cotton in Pakistan is one of the most pressing issues concerning the quality and value of cotton. Untrained cotton pickers from field to low ginned quality standards all add to cotton fetching lower value in the market. Pakistani ginned bales contain up to 10% trash, world averages only 2 to 3 percent.

High trash content increases the processing losses and lowers the quality of output of yarns. Stains in cotton adversely further affect the dyeing process. Poor quality cotton in terms of its physical properties not only raises the processing costs at the initial input and intermediate stages but also reduces the output and quality of the final textiles, yarns, fabrics and apparels.

The polypropylene contamination comes from fertilizer bags as lady pickers make picking bags or sheets from these bags and this is the biggest and worst contaminant.

Recommendations:

• A comprehensive training and capacity building programme should be developed to establish a system in the private sector for picking, grading and classifying cotton.

• Labelling of cotton bales with trash content, moisture content and weight of cotton bale should be made mandatory.

• Strict implementation of the Pakistan Cotton Control Act and Cotton Standardization Act 2009.

• All fertilizer should be packed in cotton bags to avoid contamination.

• Ban on use of Polyethylene film cotton-picking bags.

• Bags made of cotton be provided to cotton pickers to reduce contamination at the time of cotton picking. These bags should be prominently stamped and inked to avoid their usage for other purposes. 

• Specialized targeted outreach programs should be designed to educate women cotton pickers focusing on the implementation of the better-quality standards while picking cotton bolls from fields and how the better-quality cotton with less contamination can add to the wages that women receive. These programs should have women trainers’ proficient in the local language of the area for efficient communication necessary for better learning.

• Cotton pickers should be incentivized in the form of Rs. 100 incremental wage per maund if the cotton picked is free of contamination, whereas, farmers will get an extra Rs. 500/maund.

6. Institutional Reforms- Restructuring the PCCC

• Make PCCC autonomous with majority private sector representation in decision making.

• Redefine mandate and function to conduct research on various aspects of cotton, and to lead and support cotton R&D in public (provincial & federal) and private sector.

• Framework for selection of its members, as well changes in governance, accountability and incentive structure developed.

• Create linkages with research bodies (public, private, local, international), seed companies and other stakeholders.

The tasks listed above are daunting and require dedicated & selfless efforts to materialize. Turning around the cotton economy is essential if Pakistan is to get back on sound economic grounds.
 

Link: Cotton Roadmap