Cotton production surges by 75pc in current season, is it ‘significant’ increase?

Pakistan's cotton production has experienced a significant increase of 75% in the current season, reaching an impressive 8.35 million bales, as reported by Express Tribune.

This surge is expected to positively impact the country's largest export earner, the textile industry, and contribute to overall economic activities.

It is said that favorable weather conditions and the government's announcement of a higher commodity support price at Rs8,500 per 40kg for the ongoing season have played crucial roles in driving this unprecedented growth.

According to the Pakistan Cotton Ginner’s Association (PCGA), the reported production for the period (Jul-Jan) of fiscal year 2022-23 stands at 4.76 million bales.

Breaking down the production data, the substantial increase is attributed to Sindh, where harvesting surged by 120% to 4.11 million bales in the current season compared to the previous one.

The remaining production, totaling 4.24 million bales, came from Punjab, marking a 47% rise in the first seven months compared to the same period last year.

However, acknowledging the 75 percent increase raises some questions as well.  

Notably, last year, cotton production in the country saw a significant decrease of 34 percent compared to the crop yield of the previous season, as per data from the Pakistan Cotton Ginners Association (PCGA). This decrease was mainly due to heavy floods, particularly in Sindh province.

The conclusive figures for the crop year 2022-23 indicate that Pakistan's cotton output stood at 4,912,069 bales, marking the lowest production in approximately four decades. 

In contrast, the 2021-22 season witnessed a cotton production of 7,441,833 bales, reflecting a year-on-year decline of 2,528,764 bales or a 34 percent loss.

Therefore, the increase in cotton production this year must be viewed in the context of the last three/four years of production. Why is the production comparison only with one previous year? 

This means the current increase in production cannot be termed a ‘significant’ increase.

Anyhow, the PCGA estimates the full-season output to be in the range of 8-9 million bales this year. 

At the same time, Naseem Usman, Chairman of Karachi Cotton Brokers Forum, projects the total commodity production to reach 8.45 million bales by the end of the current season.

The government's announcement of a minimum purchasing price of Rs8,500 per 40kg has encouraged farmers to cultivate cotton over a larger area of agricultural land, according to industry officials.

Ahsanul Haq, Chairman of Pakistan Cotton Ginners’ Forum, highlighted that despite the stability in cotton prices internationally, local textile and spinning mills are facing challenges.

The industry is grappling with the rising cost of production due to increased energy prices, leading to discussions of potential protests.

Textile mills are awaiting a reduction in electricity tariffs from 14 cents to 9 cents, while the government is considering another increase in gas prices under IMF instructions.