Pakistan loses up to $3 billion annually as cotton output falls below half of peak: OICCI

Pakistan’s cotton output has fallen by more than half from its peak, costing the economy an estimated $2 billion to $3 billion annually through additional imports and lost export earnings, according to an Overseas Investors Chamber of Commerce and Industry (OICCI) report.

The report, titled Seeds of Growth, said cotton production had declined from about 14 million bales at its peak to an estimated 6.85 million bales in 2025-26. This was 34% below the government’s target of 10 million bales.

It attributed the decline to climate shocks, pest attacks, poor-quality seed and a blanket ban on certain pesticide ingredients introduced without a science-based transition plan.

The textile industry depends heavily on domestic cotton and generates around 60% of Pakistan’s export earnings. The report said restoring production to between eight million and nine million bales would reduce pressure on foreign exchange reserves.

Based on input from OICCI member companies operating in agriculture, the report identified regulatory delays and inconsistent policymaking as major constraints on the sector.

Agriculture contributes about 23% to gross domestic product and employs 37% of the workforce, but its productivity continues to lag behind regional competitors.

The report said hybrid seed had tripled maize yields per acre over the past three decades. However, the National Biotechnology Policy, approved by the federal cabinet last month, had yet to be implemented.

It said delays in introducing biotech corn hybrids were holding back potential exports of maize grain and silage worth about $1 billion.

OICCI Secretary General M. Abdul Aleem welcomed the cabinet’s approval of the biotechnology policy but said its benefits would remain unrealised until the policy was notified and implemented.

He said slow execution was delaying productivity gains, export opportunities and investor confidence across the agriculture sector.

The report also highlighted productivity and infrastructure gaps in potato, dairy and tobacco.

Less than 5% of potato production comes from certified processing-grade seed, while average yields of between 20 and 23 tonnes per hectare remain below the 30 to 35 tonnes achieved in other markets.

Pakistan is among the world’s five largest milk producers, but only 10% of milk is processed. About 20% of total production is lost because of inadequate cold-chain infrastructure.

The cost of tobacco production has more than doubled over the past three years, while a large undocumented segment concentrated in Khyber Pakhtunkhwa and Azad Jammu and Kashmir continues to operate outside the tax net.

The report also noted an imbalance in fertiliser use. Nitrogen-based urea remains dominant, while potash offtake stood at only 7,000 tonnes in March despite increasing by nearly 40% year-on-year.

OICCI said its member companies had introduced seed technologies, crop-protection tools and precision-farming systems that were otherwise unavailable in Pakistan. However, further foreign investment would depend on a more predictable regulatory environment.

The report recommended time-bound approval procedures for new seed varieties and pesticide registrations, a national strategy to reduce post-harvest losses and a dedicated enforcement unit to combat counterfeit seed.

It also called for greater access to credit for small farmers, who account for nearly 90% of landholders with farms of less than 12 acres.