Cotton crisis destroys jobs linked to Pakistan’s largest cash crop
Pakistan, one of the world’s largest cotton producers, is struggling to meet its own needs, a problem that could push up import bills and further hurt its fragile economy.
Years of bad weather, pest outbreaks and better margins on other crops have affected the quality and quantity of the harvest. And the scale of the damage is accelerating: output for the current fiscal year is expected to drop to the lowest level in about three decades.
As a result, the country is spending billions of dollars importing record amounts of cotton to feed its textile industry, which it cannot afford to do. His current account – which posted a rare surplus between July and December – has recently returned deficit amid higher imports. The move also threatens to push up cotton prices, which have already hit a seven-year high.
Cotton is one of Pakistan’s most important cash crops and commonly referred to as “white gold” by the 1.5 million farmers who depend on it for a living. It is used as a raw material for the textile industry, which employs 40% of the working population and generates more than half of foreign exchange earnings.
Low cotton production has forced more than 60% of ginners to shut down their factories completely over the past three years, leaving hundreds of thousands of farmers and textile workers out of work, according to Jassu Mal, president of the Association. of cotton ginners from Pakistan, a group. representing approximately 1,300 mills.
“The cotton harvest has shrunk to an alarming level, but we don’t see the government taking serious steps to restart production,” said Mal, who is also general manager of Sindh Agro Industries and operates the largest factory in ginning from Pakistan to Hyderabad.
In the last season, Mal had to close at least three of its seven factories and operate others at 50% capacity due to lack of cotton. The number of ginning workers at the company has dropped to 100 from 400 about five years ago.
Pakistan’s cotton production is expected to drop to less than 6 million bales in 2020-2021, the lowest since at least 1992, according to Nasim Usman, president of the Karachi Cotton Brokers Forum. At its peak, production was over 14 million bales in 2004-05.
The government has set a target of 10.5 million bales for fiscal year 2022. This is hardly a consolation as the forecasts for the previous year were at the same level and production is well below estimates. Pakistan’s fiscal year runs from July to June.
Meanwhile, its textile industry is booming. Manufacturers are operating at full capacity and on track to accelerate exports, thanks to the resumption of economic activities as coronavirus cases eased in June.
This caught the attention of Prime Minister Imran Khan, who said earlier this month that the textile industry was under manpower. Cotton imports have skyrocketed to make up for the production shortfall, nearly doubling to 3.68 million bales in the nine months ending March from a year ago, official data showed.
During this period, textile exports increased from $ 940 million to about $ 11 billion. However, this amount was almost offset by the increase of $ 870 million in textile imports, which consisted mainly of raw materials, during the same period.
The country is paying dearly for cotton from overseas and is expected to import an additional 3 to 4 million bales by June, said Khaqan Najeeb, former adviser to Pakistan’s finance ministry.
Higher purchases could further raise world cotton prices and widen Pakistan’s trade deficit, which increased by more than 120% to $ 3.3 billion in March as Khan’s government struggles to bring the trade under control. ‘inflation. A weaker rupee drives up the prices of basic necessities in the country when the country’s balance of payments situation deteriorates.
Pakistan’s longstanding tensions with neighboring India could exacerbate the cotton shortage. Last month, the government initially approved the import of cotton yarn from India, lifting a nearly two-year ban, but Khan’s cabinet later rejected the proposal in a dramatic turnaround, saying trade could not resume until some political issues were resolved .
To boost production, the government plans to offer subsidies for cottonseeds and pesticides and may unveil a minimum price for the first time to support farmers, Pakistan’s food security minister Fakhar Imam said in February. “The cotton production crisis is worsening in Pakistan. We will have to prevent farmers who switch from cotton to other crops, ”he said.
For now, the measures do not appear to allay the concerns of farmers. Noor Muhammad, 56, has decided not to plant cotton this year on the seven acres of land he manages in Matiari after experiencing disappointments in the past.
“I borrowed 100,000 rupees ($ 652) to buy inputs for the harvest, but a bad harvest never allowed me to pay it back,” Muhammad said, sweat streaming down his forehead as he carried a bundle of wheat, another important crop for Pakistan. with a threshing machine.
– With the help of Sanjit Das