Pakistan has reportedly decided to establish three textile cities, one each at Karachi, Lahore, and Faisalabad to meet the challenges of the WTO regime in the coming years, when textile quota ends in 2004-05.

The first such city will be set up near Port Qasim, Karachi, with all ancillary facilities, by the Export Processing Zone Authority (EPZA). The EPZA has already identified some broad parameters for such a textile city. The textile city in Karachi will have a number of supporting and ancillary industrial units in the area including knitting, bleaching and dying units, adequate infrastructure facilities, like water supply, better sewerage system, uninterrupted electricity supply, etc. It will have other supporting services as well like banking, insurance and postal, Internet and E-commerce. It seems to be a very wise decision indeed.

Pakistan’s cotton and textile sectors are the leading sectors in the economy. They provide hundreds of thousands of jobs and facilitate creation of new entrepreneurs, big and small throughout the country.

They are the leading trading groups in the stock market also. Their share in stock market capitalisation is about Rs70 billion, constituting 8 per cent of the aggregate market capitalisation.

During 2002-03, textile goods exports were worth $7.17 billion, which constituted about 65 per cent of the total export earnings of Pakistan. These sectors are projecting to achieve an export target of $10.12 billion by the fiscal year 2004-05, which appears to be an achievable target.

When the WTO regime will come into full force after January 2005, the poor farmers in Pakistan may incur higher production cost on their agricultural produce due to abolition of various subsidies.

Farmers from the advanced countries on the other hand will enjoy comparative advantages over the subsistence farmers of the poor third world countries. Farmers in advanced countries are getting $1 billion a day as subsidies and there is no reason to believe that they will cease to receive such help at the behest of the WTO, because farmers in the advanced countries have full backing and support of their respective governments.

Even some European countries are expressing apprehension that their farming sector will suffer if they are to withdraw subsidies completely from their farming sector. Therefore, they are also reluctant to anoy their farmers.

However, the powerful influence of the WTO regime will be difficult to repulse by the poor farmers of the third world countries. Hence our government and policy makers should also be fully prepared to face the situation by evolving an appropriate strategy in such a way that our farmers in general and cotton growers in particular not only remain unaffected but their financial and economic conditions become stronger than ever.

The highest priority should be given to increase the productivity of better quality raw cotton. Abundant quantity of raw cotton will be the main pillar of the future textile cities. Pakistan is already facing the pinch of shortages of this vital raw material.

The total need of raw cotton of the textile industries and household sector is more than 12 million bales, whereas the total present production is below that level. Since early 1990s cotton production has been fluctuating sharply.

In the fiscal year 1991-92 raw cotton production in Pakistan peaked at 12.822 million bales. But during the subsequent years this high growth momentum could not be maintained mainly due to severe pest attacks.

And as a result production drastically fell to 8.041 million bales in 1993-94. Since 1999-2000 production has been stable around 10 million bales.

However, in the current fiscal year panic has gripped the cotton market due to reports of severe pest attacks. The artificial crisis in the market has already driven the prices up to Rs 3500 per mound. This is not a good omen for the textile sector. Textile manufacturers had imported 1.108 million bales of cotton to meet their demand of 11.4 million bales during 2002-03.

If the domestic sector is not able to provide targeted cotton of 10.6 million bales, manufacturers will have to import raw cotton. Who is responsible for this situation? It is the pest which has devastated the crop which was expected to be bumper one. These pests are the first threat in the creation of textile cities and towns.

These micro creatures are surely far more deadly and challenging than WTO requirements.The available pesticides in the retail market are no match for them because most of these are either fake or adulterated. Unfortunately there appears to be no effective check and punishment system to stop the adulteration business. Powerful mafias run adulteration business.

Before the subsidies are withdrawn the farmer’s economic and financial conditions also need to be improved. Apart from removing the menace of pests, the farmer should have access to easy loans at reasonable rate of interests. The weighted average lending rate has come down to as low as 7.6 per cent but the agriculturists are getting loans at higher mark-up rates.

Despite severe slashing down of the lending rates by the commercial banks the Zarai Tarakkiati Bank is charging about 11 per cent on its loans to the farmers.Only a few years ago farmers were getting concessional loans at less than six per cent mark-up, now the opposite has happened. Like exporters and manufacturers farmers should also get credit at comparable rates.

The textile cities will thrive only if the farmer is encouraged and assisted to increase production and improve quality of cotton.