And now a cotton crisis?

The wheat crisis in Pakistan has started to create a ripple effect in the country’s textile sector, with cotton cultivation being the latest victim. As the wheat crop failed to sell at official rates, farmers have been left with insufficient funds to procure seeds, pesticides, fertilisers and other farm inputs for the next crop, including cotton. This has resulted in delayed cotton sowing and has become a cause for concern in the textile and ginning sectors.

The unexpected drop in temperatures in February-March further exacerbated the problem by delaying wheat ripening and subsequent harvesting, meaning land that would have been used to plant cotton was unavailable. As a result, cotton acreage has already dropped in coastal areas of Sindh and several districts in South Punjab. Given the circumstances, the country appears increasingly likely to fall short of the annual harvesting target of 10 million bales of cotton. Significantly reducing the textile industry’s need for imported cotton would also reduce the import bill by hundreds of millions of dollars. And it is not just cotton lint — cottonseed oil is a common edible oil and is by far the most popular locally-produced cooking oil. A bad cotton crop would also increase cooking oil imports and lead to additional food inflation. In a somewhat surprising twist, cotton ginners are now calling on the government to subsidise wheat farmers. The hope is that by covering their losses on wheat, the government would put them in a better position to invest in planting cotton.

But with little fiscal freedom amid the IMF’s loan-related restrictions, the government is unlikely to be able to offer the kind of support needed to minimise the fallout of the wheat crisis. However, indirect measures are still available, such as creative lending models that would allow access to easy credit without increasing government expenditure. Whatever the solution, the government needs to decide quickly if it is to avoid the looming cotton crisis, which would be another major challenge for Pakistan’s already struggling economy.

Published in The Express Tribune, May 11^th, 2024.

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