LAHORE: The paradox for local cotton farmers is stark: they are the most efficient yet the least compensated members of the textile value chain. Despite producing the cheapest cotton in the global market, they are made to get the lowest returns.
Despite producing the cheapest cotton in the global market, they are made to get the lowest returns. The latest Karachi Cotton Association’s ex-gin price of just 67.8 cents per pound (lb) or Rs15,800 per maund is a stark reminder of this disparity being meted out to local growers. Compared to cotton being sold in international markets, local cotton is significantly undervalued due to multiple reasons. China’s cotton is sold at 98.61 cents/lb, showing 29.98 cents/lb leverage over Pakistan. India’s cotton is pegged at 83.4 cents/lb or 14.77 cents higher than Pakistan’s, and Brazil’s cotton is 4.3 cents/lb higher as it is sold at 72.93 cents/lb.
Only the New York Cotton Market prices are comparable to Pakistan’s current ex-gin rates. This means local farmers are hugely missing out on better income opportunities if compared with foreign growers. The low returns are affecting their livelihoods, making it hard for them to invest in better farming practices and technology.
The Farmers Associates Pakistan (FAP) said that this economic disadvantage is creating a vicious cycle of low productivity and income. Pakistani farmers are struggling to compete globally, and their economic standing is suffering drastically. “It is time for policies and interventions to ensure fairer prices for Pakistani cotton farmers,” FAP argued.
According to Hassan Ali Chanihu, director at FAP, “unfortunately, no one is paying attention to the plight of local farmers. The high cost of cotton production strongly corroborates the narrative of struggling growers. They are facing significant losses due to policy failures, rising input costs like fertiliser, pesticides, diesel and electricity. Climate change also resulted in production losses. The decline in cotton production and the need for substantial imports further emphasize the domestic crisis.”
Farmers are indeed receiving low dollar-equivalent prices; their profit margin wholly eroded because they face one of the highest costs of production in the world, he lamented.
Chanihu, who hails from Sanghar, one of the biggest cotton producing areas of Sindh, was visibly perturbed over the poor financial condition of cotton growers, stressing the need to either put a ban on import of cotton or ensure buying of 0.5 million bales of cotton by the Trading Corporation of Pakistan at least Rs8,500 per maund.
Fair prices will help them achieve better economic stability and improve the sustainability of the cotton sector in the country, he said and added, the government and stakeholders must work together to address this issue and uplift the cotton farming community for the betterment of the whole cotton value chain.
Local farmers, with their centuries-old knowledge and relentless labour, used to produce cotton with such efficiency that it was the most affordable on the global market, the FAP leader stated. Yet, “this very efficiency seemed to penalise them, locking them into a vicious cycle of low returns. As a provider of raw material, they are truly the unsung heroes of the textile value chain, providing the cheapest fibre, only to watch others flourish,” he regretted.
Their contribution should not be overlooked by policymakers, he stressed and added that urgent attention is required to support them not only by increasing their income but reducing their cost of production. Otherwise, he warned, farmers would be forced to abandon cotton cultivation for goods.
Meanwhile, the imposition of tax on imported cotton has been hailed by stakeholders, terming it a major achievement for the local cotton and textile industry. Malik Sohail Talat, chairperson of the Federation of Pakistan Chambers of Commerce and Industry’s (FPCCI) Special Committee for the Revival of Cotton Industry said this step would ensure a level playing field for local cotton growers.
“This SRO is not just a regulatory reform but a victory for the entire value chain of Pakistan’s cotton and textile industry,” he said, adding that the SRO, issued under the wise leadership of Patron-in-Chief SM Tanveer, “reflects our commitment to strengthen local resources and safeguard the future of our farmers, ginners and manufacturers.”
Veteran business tycoon Akber Sheikh commented on the struggles of the textile sector. Due to a shortfall in local cotton production, the price of domestic cotton has been downgraded to match imported cotton. This problem is compounded by rising production costs, as interest rates and energy tariffs are twice as high as those of Pakistan’s competitors. As a result, Sheikh concluded, the entire textile value chain is at risk.
