Costly imported cotton

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The alarming decline in Pakistan's cotton output poses a significant threat to the national economy and will likely have a knock-on effect across multiple sectors. The country is grappling with a nearly 50% shortfall in cotton production compared to official targets, and a 34% year-on-year decline.

At the heart of this crisis is the drastic drop in domestic cotton cultivation, which has reportedly fallen to historically low levels. With total production recorded at only 5.525 million bales this season, the implications are dire, especially as Punjab — the cornerstone of our cotton industry — experiences unprecedented production losses.

In a worrying twist, the traditionally more productive region has been surpassed by Sindh, driven by a shift towards sugarcane farming, which is seen as more lucrative for farmers, but has significantly less potential for value addition by other economic sectors. The realignment spells disaster for an industry already reeling from adverse weather conditions and poor market policies that favour imports over local products.

The fallout from these declines extends beyond the agricultural sector. Cotton is the backbone of Pakistan's textile industry, which significantly contributes to the country's exports and employment. However, with local textile mills acquiring only 5.1 million bales this year — down from 7.9 million bales previously — the ripple effects are beginning to be felt.

A persisting trend threatens job losses and reduced income for hundreds of thousands of workers. Moreover, reliance on imported cotton places a heavy burden on the exchequer. A recent news report says cotton and cooking oil imports combined will cost around $5 billion this year.

Unfortunately, the cash-strapped government seems both unwilling and unable to invest in encouraging cotton production, even going as far as effectively subsidising imports by making them duty-free while taxing local cotton. While changing production trends is a long-term project, the government could surely address inconsistencies, such as its cotton tax policy to encourage local growers.