Cotton production rise: will economy surge?

According to the latest data released by Pakistan’s ginners’ body on November 18 Cotton production up to Nov 15 stood higher by 6.58 per cent on a year-on-year basis.

Despite a steep fall in phutti (seed cotton) arrivals during the first fortnight of November, overall production stood at 9.358 million bales against 8.78m bales a year ago.

About 1.224m bales were produced in Nov 1-15 mainly due to slow arrivals of phutti. The slowdown in phutti inflows was because of a heavy smog and fog in Punjab. As many as 1.832m bales were produced in the same period last year. This means 608,013 fewer bales have been produced so far this season.

The report shows Sindh produced 3.813m bales during the period under review, up 12.14pc from 3.4m bales last season. Cotton production in Punjab grew 3.07pc to 5.544m bales.

But the fear of poor quality continues to exist. Even if cotton production is in line with the annual estimate of 12.6m bales, the consumable quantity of cotton remains doubtful. Independent analysts estimate cotton production will remain 11-12m bales.

Spinners have so far purchased 7.253m bales compared to 6.579m bales that they lifted in the same period last year. Exporters purchased 207,029 bales against 155,544 bales last season.

Ginners are currently holding around 1.898m bales of unsold stocks against 2.045m bales that they held a year ago.

Out of 994 ginning factories that are presently operating in the country, 700 are in Punjab. The rest are operating in Sindh.

Importance of cotton in Pakistan’s economy

Cotton is a major crop of Pakistan after wheat and it occupies the largest area in Pakistan compared to other crops. Cotton crop earns the country largest export revenues and in addition to the lint, the seed of cotton for oil and meal accounts for 80 percent of the national production of oilseed. Cotton and cotton related products contribute 10 percent to gross domestic product (GDP) and 55 percent to the foreign exchange earnings of the country. The area under the cultivation of cotton crop increased significantly in the last 30 years, around 7.86 million acres in 2015–2016 (Economic Survey of Pakistan, 2015-16).

In 2011–2012, Pakistan ranked as the 4th largest cotton producer, (preceded by China, India and the USA) with a 9.81 percent share in global cotton. In the same period, Pakistan's yarn exports contributed 26.1 percent and 14.3 percent to the global market.