Recovering cotton output

Cotton output has recovered significantly in the last few months, with a trade industry group saying it has recorded a 75% increase in output this season. The increased cotton output has already proven to be extremely beneficial for the local textile industry, along with other related industries, thanks to the increased availability of local cotton, which is usually much cheaper than imported fibre of the same quality. Given the impact of inflation on other production inputs, local cotton also makes it easier for the textile industry to make better cost projections and operate more efficiently. However, the improved yield is not being attributed to any innovation or research, but simply to good weather and guaranteed prices. The government’s support price of Rs8,500 per 40kg proved to be competitive enough to encourage growers, especially in Sindh, which saw output more than double this year. Meanwhile, Punjab saw its output rise by almost 50% to keep top spot in total output.

But the biggest contributor was still good weather. Last year was a particularly bad one for cotton, largely due to the continuing impact of the 2022 floods. In this light, the numbers this year merely reflect a return to normalcy. In fact, the projections are that the output for the full year will roughly double to eight to nine million bales, which is significantly lower than the target of over 11 million bales that the government set at the start of the year. Put another way, cotton farmers are still underperforming in the government’s eyes, and imports will remain a necessity because new demand is well over 10 million bales. Conversely, a US Department of Agriculture analysis from November was much more conservative, estimating output for the season to taper off at just 6.5 million bales and import requirement at over four million bales. The actual numbers this year make it clear that import demand will be significantly lower, freeing up precious foreign reserves.

Published in The Express Tribune, February 6^th, 2024.

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