While the current boom in lawn may have contributed positively to the fashion industry it has not brought any significant prosperity to farmers producing cotton, the basic unit of the fabric. Since the cotton sector is regulated, by and large, by the international market it doesn’t matter to farmers whether the retail price of a lawn suit is Rs5,000 or Rs7,000; no matter how high lawn prices soar, the rate of the cotton crop remains more or less the same. For instance, in 2010 farmers sold cotton at an impressive rate of Rs4,000 per 40kg but last year they sold it for as low as Rs1,600 and Rs2,000 per 40kg after devastating rains washed away the crop. Picking of the current crop is underway but so far the prices have not gone beyond Rs2,400.
Mehmood Nawaz Shah, a cotton grower believes that just two or three per cent of the upper strata of our society feels comfortable buying expensive fabric. “This kind of sale isn’t going to impact the cotton sector nor farmers.”
“Lawn sector may have shown progress but our cost of production keeps increasing, while the government does not give us any subsidy,” argues another cotton producer, Abdul Majeed Nizamani. “One must relate the cost of production to returns we get.India gives a subsidy of Rs345 billion on just urea fertiliser — an important ingredient which increases production — whereas our prices of urea are always skyrocketing.”
The Indian government bears 75 per cent overall cost of production of the agriculture sector therefore it is impossible for Pakistan to compete at an equal footing with an overall 800 per cent higher cost of production. Due to non-provision of subsidies, Pakistan’s per acre productivity is less than other countries.
According to Mehmood the benefits of the lawn boom are restricted to designing, textile and retail sectors. “Lawn consumption is increasing but for farmers there is no change in the prices of cotton crop, instead we see a decline,” he says.
He points out that the country’s agriculture sector contributes 22 per cent of Pakistan’s GDP; in this way it supports many other components of our economy. “If the agriculture sector is given priority and our policies are agriculture friendly it will have a cumulative effect on the overall economy,” he says.
The cotton sector can benefit from this boom if the retailers are willing to contribute towards a research fund. “Say Rs100 million are collected towards research by the retail sector and the government comes up with a matching grant,” Mehmood suggested. “This entire amount can be spent on research to improve the quality of our cotton. This will lead to overall development of the cotton sector.”
Mill owners claim that real gains are made by retailers, who earn 100 per cent profit on each deal. Their contention is that retailers are not investing in anything other than handling or marketing the product. Actual cost of production is being incurred at the millers’ end. “Wholesalers or dealers are the linkage between retailers and textile millers. It is here that the prices start to rise before the product reaches retail outlets. Retailers unreasonably add their own 100 per cent ratio of profit,” says Khalil Baloch, a textile mill owner of Kotri.
“Retailers add a profit margin which provides them a comfortable margin to bargain with buyers. They can then deduct up to Rs300 to Rs400 from the sticker price which shows that the price was unnecessarily inflated to begin with,” he says. “If millers have a product for Rs100, wholesalers can add 15 to 20 per cent profit and expenses. If the same ratio is applied by retailers then the product has to be sold at not more than Rs200 but actually retailers will sell it at Rs300 for a 100 per cent profit.