Textile industry will have to import $5bn cotton amid drop in production

ISLAMABAD: The 64 percent drop in cotton arrivals at the ginning stage has alarmed the export-oriented textile industry, which now faces the prospect of importing cotton and yarn worth $5 billion in FY25 to maintain current export levels.

“We will need to import 9-10 million bales of cotton and yarn, costing $5 billion in foreign exchange, to keep the textile units operational and meet export orders,” senior officials at the commerce ministry told The News.

A significant number of textile units have already shut down, primarily due to an electricity tariff exceeding 15 cents per unit — the highest in the region. With the shortage of domestic cotton and high cost of electricity, textile exports are unlikely to surpass the $16.65 billion recorded in FY24. The textile sector accounted for 54.29 percent of the country’s total exports, which stood at $30.676 billion in FY24.

The rural economy has been severely impacted, as farmers were discouraged from growing cotton on a larger scale after failing to receive the promised price from the government for their bumper wheat crop. This has resulted in cotton production falling short, with a massive deficit of 10 million bales, forcing the textile industry to rely heavily on cotton and yarn imports for value-added products.

With rural areas producing just five million bales, the decline has led to massive unemployment, exacerbating hardships for rural communities. “For every rupee invested in the rural economy, there is a fivefold impact on the national economy,” the officials added.

According to the Pakistan Cotton Ginning Association (PCGA) report released on September 15, 2024, cotton arrivals at ginning factories in Sindh have dropped by 62.63 percent, while in Punjab, cotton arrivals have plummeted by 65.13 percent. The flow of seed cotton at the ginning stage has shrunk to nearly one-third of last year’s volume. Total cotton arrivals have fallen to 1.434 million bales in the first half of this month, compared to 3.933 million bales during the same period last year — a staggering decline of 64 percent. Six districts in Punjab reported zero cotton arrivals, an unprecedented decline in production. Not a single district recorded an increase in cotton arrivals, as per the PCGA report.

Factors behind this sharp decline include climate change, low lint prices, poor-quality seeds and high input costs, according to a cotton grower.