Cotton production likely to miss target by wide margin

May partially impact national economic output that is estimated to remain below 3%

ISLAMABAD: Cotton production this year may remain at 10.2 million bales - one-third less than the official target - and may partially impact the overall national economic output that is already estimated to stay below 3%.

The lower production estimate came on Friday in the backdrop of Pakistan Tehreek-e-Insaf (PTI) government's inability to resolve issues afflicting cotton output, including the minimum guaranteed price.

So far, many meetings have taken place attended by Finance Adviser Dr Abdul Hafeez Shaikh, Jahangir Khan Tareen and National Assembly Speaker Asad Qaiser but no breakthrough could be made.

Crop yields at risk from rising temperature

The Cotton Crop Assessment Committee on Friday made its first appraisal of the crop production and came to the conclusion that the output could be around 10.2 million bales, according to the Ministry of National Food Security and Research.

The estimated output is just 340,000 bales or 3.44% higher than the previous fiscal year despite a 14.2% increase in cultivation area.

Headed by Prime Minister Imran Khan, the National Economic Council had approved the cotton production target of 15 million bales. But requisite supportive measures have not been taken to achieve the target.

Pakistan's economy is projected to grow at a pace of 2.4% in the current fiscal year, according to projections of the Ministry of Finance and the International Monetary Fund (IMF).

The government had voiced hope that a better cotton output would help lift the overall national economic output, which now appears to be challenging after initial assessment. The cotton output has implications for both agriculture and services sectors of the economy. Pakistan's annual cotton requirement is assessed in the range of 13 to 15 million bales.

"The shortfall in production will result in cotton imports valuing between $720 million and $1.2 billion at current international prices," said an official of the Textile Division.

Initial estimates suggested that against the target of 10 million bales, the production in Punjab may remain around 6.2 million bales, falling short of the target by around four million bales or 39.2%.

Production in Sindh is estimated at 3.9 million bales against the target of 4.6 million bales, which is 700,000 bales or 15.2% less than the target.

Similarly, production in Khyber-Pakhtunkhwa and Balochistan will remain half of the official target.

Cotton production is expected to fall despite an overall 14.3% increase in cultivation area that stood at 2.78 million hectares this year. This shows that per acre yield, which has historically remained around 22 maunds per acre, has dropped further. Federal and provincial governments have also been unable to create environment conducive for introduction of new seed varieties even after enactment of the Plant Breeder Rights Act 2016.

A member of the All Pakistan Textile Mills Association (Aptma) was of the opinion that the assessment was very realistic and ground realities were very close to the forecast.

Cotton growers have emphasised the need for price intervention by the government in such a way that benefits go directly to the farmers.

"Cotton prices are disturbed and until good returns are ensured to farmers, the production will keep going down," remarked Sohail Harral, Executive Member of Pakistan Cotton Ginners Association.

The cotton committee will make a second assessment of the situation after three to four weeks. The government is also struggling to offer a minimum support price to the cotton growers. The Ministry of National Food Security and Research had proposed the minimum price of Rs4,000 per maund of cotton and purchase of 500,000 bales from the farmers.

However, quasi-fiscal operations like procurement of wheat and sugarcane increased liabilities of the federal and provincial governments. The IMF also wants to put a full stop on quasi-fiscal operations.

Because of differences among the stakeholders, the government has not yet reached an understanding on the minimum support price.

Govt urged to impose agriculture, climate emergency

Despite a low initial assessment of the cotton crop, the Ministry of Finance on Friday again insisted that cotton production would increase to 13 million bales.

"Earlier estimates of cotton crop suggest that cotton production will increase at least by three million bales in fiscal year 2019-20 from last year," according to a statement issued by the finance ministry on Friday. All these developments indicated agriculture was likely to rebound and grow more than 3% in the current fiscal year, it added.

The finance ministry said better results in the agriculture sector would boost growth in large-scale manufacturing (LSM) and exports of the country. "Impact of better cotton production and subsidy schemes have spillover effect on export growth and textile sector, which will support further the current account and balance of payments position," said the finance ministry.

Published in The Express Tribune, October 5^th, 2019.

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