Cotton arrivals plunge 43pc as crop failure looms

Published November 4, 2020
FARMERS pick whatever is left of the cotton crop in Mirpur Khas. Growers in Sindh have suffered huge losses in the ongoing season, losing more than 50pc of their investments in the cotton crop owing to the monsoon rains.
FARMERS pick whatever is left of the cotton crop in Mirpur Khas. Growers in Sindh have suffered huge losses in the ongoing season, losing more than 50pc of their investments in the cotton crop owing to the monsoon rains.

KARACHI: Phutti (seed-cotton) arrivals into ginneries declined by a whopping 43 per cent to 3.4 million bales till Nov 1 compared to 6.1m bales in the same period last year due to monsoon rains and pest attacks, showed fortnightly data released by the Pakistan Cotton Ginners’ Association (PCGA) on Tuesday.

During the period, Punjab produced 1.72m bales while Sindh generated identical quantity of 1.72m bales. Of the total production, textile mills bought 2.57m bales while 17,600 bales were picked up by exporters.

Total 528 ginning factories were operational in the country including 193 in Sindh and 335 in Punjab.

“Cotton output is expec­ted to fall as low as 5m bales,” PCGA Chairman Dr Jassu Mal told Dawn. “Production in Sindh has fallen mainly due to monsoon rains whereas Punjab’s output plunged due to pest attacks.”

Import could rise to 10 million bales to bridge shortfall

The government projects cotton production to reach 10.98m bales for this season while the country produced over 8.5m bales in the last season.

Dr Mal said that the poor quality of seeds, lack of awareness among growers on fertiliser use and the failure of the governments — federal and provincial — in managing pest attacks are the reasons behind the consistent decline in cotton production over the last few years.

Subsequently, he said textile millers will have to import the raw material to meet the gap.

The decline in cotton output is a worrying sign for the textile industry particularly spinners as it will also have a partial impact on cotton prices, said JS Global’s Ahmed Lakhani.

Textile companies will have to rely more on imports, which carry duties and taxes at the import stage. This will naturally make them less competitive than regional peers, he added.

As per the official statistics, Pakistan’s annual cotton production has fallen from 11.9m bales in FY18 to 9.17m bales in FY20. With annual demand hovering above 15m bales, the textile sector will have to import the raw material.

“We will have to import at least 10m bales in the current year which will increase the country’s import bill. We could have easily saved this foreign exchange, had the government taken required action,” said Dr Mal.

“The cotton production is declining rapidly and prompt action should be taken,” said Syed Zeeshan Kazmi of IGI Finex Securities. “Due to the drop in production it will not be possible to meet the needs of textile mills and for that we have to import cotton which will have a negative impact on textile exports,” he added.

Earlier, the All Pakistan Textile Mills Association (Aptma) said that cotton crop failure is costing Pakistan over $8bn per annum in lower GDP per million bales of cotton and $2bn for this year in additional imports, while the country needs to revive cotton crop to meet domestic demand.

“Millers will meet their immediate shortage from the local market, but the rest will be sourced from the international markets,” said Aptma Member Naveed Ahmed.

Meanwhile, Dr Mal said that phutti prices have gone up from Rs3,500 to Rs5,000 whereas the cotton prices have risen from Rs8,400 to Rs10,000 per maund over the last few months. In October, cotton prices hit a 10-year high of Rs10,500 per maund in line with the international ­markets.

Between July-September, the country imported cotton worth $382.6 million, the State Bank of Pakistan data showed. Meanwhile, cotton imports in the FY20 amounted to $1.71 billion, up 6pc from FY19.

However, Dr Mal warned that cotton growers stand to lose the most. As per the PCGA estimates, growers have lost more than Rs50,000 per acre against an investment of Rs80,000 in the ongoing season. Rains and pest attacks have wreaked havoc on the cotton crop.

Published in Dawn, November 4th, 2020

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