Cotton decline

Cotton has long been described as Pakistan's "white gold", but the country now appears to be steadily surrendering one of its most strategically important crops. The sharp decline in cotton cultivation in Punjab is a warning that Pakistan is weakening the foundation of its export economy and industrial competitiveness. If the present trajectory continues, the country will find itself importing not only more cotton but also more edible oil, while its textile industry loses further ground in global markets.

Punjab, which produces the overwhelming majority of Pakistan's cotton, managed to cultivate only 2.614 million acres against a target of 3.2 million acres - an 18% shortfall and over half a million acres less than last year. Several factors have converged to produce this outcome. Erratic weather has discouraged growers already battling rising production costs and declining profitability. At the same time, the expansion of sugar mills around Rahim Yar Khan and adjoining areas has encouraged farmers to switch from cotton to sugarcane, a crop offering more assured returns. Farmers cannot be faulted for making economic decisions that maximise their incomes. The failure lies with policymakers who have been unable to make cotton cultivation commercially attractive despite repeatedly acknowledging its strategic importance. The recent federal budget has done little to inspire confidence. Cotton and phutti prices came under immediate pressure following the budget announcement, while the proposed 18% sales tax on cottonseed and oilcake further unsettled the market. Although there are indications that the tax may eventually be withdrawn following recommendations from the Senate and representations by industry stakeholders, policy uncertainty itself discourages investment.

Cotton links the farmer to the factory, the village to the export market and agriculture to industrial growth. Allowing this chain to weaken would amount to voluntarily surrendering one of Pakistan's greatest economic strengths.