Cotton prices stay low amid grim outlook

LAHORE: The projected cotton production for the 2024-25 crop season may fall below last year’s levels, yet prices remain subdued as the marketing season begins, disappointing growers.

This year’s cotton crop is expected to yield fewer than eight million bales, primarily due to a 20 per cent reduction in acreage compared to targets. Farmers, disheartened by plummeting prices last season, have shown less interest in cultivating cotton. They feel disappointed about what they call backtracking by the government over its promise regarding the purchase of seed cotton at an official price of Rs 8,500 per 40kg.

As far as the current state of the crop is concerned, the Pakistan Cotton Ginner’s Association (PCGA) expects opening arrivals this month to be much less than last year’s level, terming low production as the main reason. Regarding the output of early-sown cotton, “we fear up to 45 per cent fewer arrivals of seed cotton by the middle of this current month,” said a senior member of the PCGA.

He said that prices are moderately stable for now and may see a rising trend if the main crop arriving after September tends to show a declining trajectory.

However, cotton farmers are wary of what they call “abysmally low returns” being offered to them at the start of the season, which, according to them, are even not enough to cover their cost of production.

Today’s seed cotton rate is hardly touching Rs8,500 per 40kg, which is even less than last year’s cost of production calculated by the then government. “You can well imagine how much the cost of cotton cultivation has been multiplied since then on various counts, especially due to elevating fertilizer, diesel and pesticide prices, spiralling electricity tariffs, and the more agonizing impact of the federal budget, said Khalid Khokhar, president of the Pakistan Kissan Ittehad (PKI).

He feared that if farmers face losses in cotton production this year too, many of them may abandon its cultivation altogether.

Haji Ramzan, spokesperson of the Kissan Board Pakistan (KBP), was of the view that current cotton prices in Pakistan are well below those in Indian and Chinese markets. “Cotton ginners have been given full liberty to suppress seed cotton prices, ditching farmers as much as they want,” he added.

Ramzan strongly criticized the Punjab agriculture department for discontinuing cotton drives in the province. “I wonder why officials are not taking an interest in reviewing cotton crops on a regular basis. I am not much of a fan of what the provincial department used to do for the betterment of farmers, but I still fail to understand why they are not showing any interest in cotton plantations in the province, even for the sake of lip service,” he observed.

He claimed that there was no visible activity on the cotton front by the department in June this year.

It may be noted that during 2023-24, cotton area cultivation increased to 2.4 million hectares (ha) against 2.1 million ha last year, showing a growth of only 13.1 per cent. In contrast, its production recorded an increase as it was significantly higher than the previous year’s flood-ravaged crop.

According to an official report, an increase in the area under cultivation contributed to increased cotton production. This overall improvement in production last year was linked to what officials believed was a better quality of pest-resilient seeds, favourable weather conditions, and an attractive fixation of the intervention price of cotton (‘phutti’) at Rs8,500/40 kg at the start of the sowing season.

Cotton is an important cash crop, contributing 0.7 per cent to GDP and 2.9 per cent to agriculture value addition. Cotton’s supply chain has been the biggest earner of foreign exchange for the country, besides providing employment to a maximum number of people in both rural and urban areas.