KARACHI, Oct 24: The country will have to spend huge foreign exchange on importing around 2.5 to 3 million cotton bales to meet the expected shortfall even after harvesting around 12.8 million bales as estimated by the government.

The installed capacity of over 10 million spindles consume more than 15 million bales, but cotton production continues to lag behind owing to poor yield and lack of proper management and research work.

Due to short supply cotton prices keep on rising in the domestic market, which makes the entire textile industry unviable.

The cotton crop has been a victim of some pest attack for years but this year a new pest – mealybug – has caused a huge damage to the crop to the tune of 1.5 million bales.

However, Federal Minister for Food and Agriculture Sikandar Hayat Khan Bosan still believes that the country will produce around 12.8 million bales, down from earlier estimates of 14.1 million bales.

Even if we take optimistic production figures of cotton as hinted by the minister, the country will still be importing huge cotton to meet the spinning industry’s demand.

Rising world cotton prices, owing to lesser crop, are yet another factor, which keeps cotton prices highly volatile, and presently are being quoted above Rs3,000 per 40 kg in the domestic market.

Being inflicted by rapidly rising oil prices many countries are striving for alternate energy sources. Consequently, crops such as sugarcane and corn, having potential of being converted into fuel grades, are being sown on a large scale.

As a result of this phenomenon these crops are fetching much higher prices in the world market and growers are fast shifting from cotton to these crops.

The global shortage of cotton against an estimated consumption has soared prices up to $0.66 per lb in New York cotton market, and there is a growing fear that as demand emerges from countries facing short crop, prices would further increase.

Independent estimates place crop size at 12 million bales and also argue that since there are no opening stocks with the mills, the actual available cotton for current season (2007-08) would be at around 11 million bales.

There is panic in the textile industry, which is faced with two- pronged problems. On the one side, they are deeply concerned with rapidly rising raw cotton prices and on the other, they confront with yarn prices which presently do not fetch their cost. Though domestic cotton market prices are still lower than the world market, the industry is of the view that it was still sustaining loss owing to lower yarn prices.

“My unit, which produces around 120,000 pounds of yarn per day is on average has to bear Rs0.3 to 0.5 million loss per day due to price differential,” claimed former chairman of Aptma Waqar Mannoo.

He said up to December 2007, domestic prices would stay lower than world cotton prices, but as local stocks start depleting and actual crop size emerges, the import parity would go higher.

However, Mr Mannoo was of the view that the price differential between yarn and cotton would force many spinning units to close down, and advertisements for sale of textile units have started appearing in the newspapers.

There is a greater need to increase cotton production to keep the textile industry viable, he suggested. In India cotton production has gone very high and this was mainly because of proper handling of BT cotton by the government under the guidance of experts and technologists.

In Pakistan, he said, BT cotton was cultivated by growers by using uncertified seeds, which resulted in a disaster as the mealybug damaged a very large quantity of standing cotton crop in upper Sindh and lower Punjab.

It is also being said that if a large number of mills go out of operation, only then the gap between cotton demand and supply would narrow down.

Pakistan needs an altogether fresh look at cotton crop and a lot of research has to be made to boost per acre yield so that the output could be raised to 20 million bales within next couple of years.