• Surging reliance on duty-free imports to cost $5bn
• Steps needed to revive growers interest in cotton crop
LAHORE: Pakistan’s cotton industry is facing an alarming crisis as national production plunges to the second-lowest level in the country’s history, falling nearly 50 per cent short of the official target and 34pc below last year’s output, reveals the Pakistan Cotton Ginners Association (PCGA) final report for the crop season 2024-25 released on Monday.
Interestingly, despite this sharp production decline, approximately 365,000 bales of unsold cotton are stockpiled in ginning factories, sparking fears of an unprecedented reduction in cotton cultivation for the upcoming season.
For the first time, Sindh has surpassed Punjab in cotton production, a development attributed to record sugarcane cultivation in Punjab replacing cotton, combined with unfavourable weather conditions. According to PCGA figures, total cotton production stood at just 5.525 million bales. Punjab produced 2.718m bales and Sindh 2.807m bales—both showing a sharp decline from last year.
Purchasing activity in the domestic market has also plummeted as textile mills have acquired only 5.1m bales this year, compared to 7.9m bales in the previous season. Exporters bought just 47,000 bales, a dramatic fall from 293,000 bales last year. Only 2,075 bales have been exported—a stark indicator of the sector’s collapse.
Cotton Ginners Forum Chairman Ihsan-ul-Haq warns that Punjab has seen 15 to 52pc reduction in white lint production in its cotton belt, while Sindh has suffered production losses ranging from 16 to 70pc. Shockingly, four districts in Punjab recorded zero cotton output this season.
Unless immediate corrective measures are taken, he cautions that next season’s cotton harvest may drop even further, forcing Pakistan’s increased reliance on expensive imports.
Pakistan Cotton Brokers Association Secretary Sundas Ayub points out that early sowing for the 2025-26 season has commenced. Still, growers don’t seem enthusiastic due to the government’s cold shoulder and weak market situation owing to low demand, as last year’s stock is already waiting for buyers.
One of the major factors crippling the domestic cotton market is the government’s Export Finance Scheme (EFS), which grants tax exemptions on imported cotton and yarn while imposing an 18pc sales tax on locally produced goods. This policy has encouraged cheaper imports, undermining local ginners and farmers.
Pakistan imported 2m bales of cotton and around 1.25m bales of yarn in 7MFY25. Additionally, reports confirm that another 600,000 to 700,000 bales have entered the country from Afghanistan, further saturating the market with tax-free cotton.
Cane caused devastation
The unchecked expansion of sugarcane cultivation, driven by government-backed incentives, has further worsened the situation. Despite a 15 to 20pc drop in per acre yield due to adverse weather, millers exported a record 758,000 tonnes of sugar from July to January 2024-25. This boosted sugar prices from Rs12,200 to Rs15,500 per 100 kg bag in the local market and pushed cane purchase prices from Rs400 to Rs575 per 40 kg, making it more profitable than cotton. As a result, farmers have abandoned cotton fields for sugarcane sowing, deepening the crisis.
Mr Haq warns that a powerful lobby appears to be actively promoting sugarcane cultivation at the expense of cotton, endangering Pakistan’s textile backbone and risking billions of dollars in future imports of cotton and edible oil.
Amid this crisis, Prime Minister Shehbaz Sharif has formed a 12-member committee led by Planning Minister Ahsan Iqbal to review possible reforms to the EFS and present recommendations within two weeks as industry experts are urging policymakers to implement immediate, cotton-friendly strategies to boost domestic consumption and reduce the country’s growing reliance on costly imports of cotton and edible oils, which is likely to drain $5 billion from the national economy this year to meet the domestic crop shortfall.
Industry leaders hope that abolishing tax exemptions on imports will revive domestic cotton farming and reduce the ballooning import bill.
Sajid Mahmood, Head of the Technology Transfer Department at the Central Cotton Research Institute (CCRI), Multan, says that a major reason for the decline in cotton production is the lack of investment in cotton research and development.
“Over the past several years, there has been no significant investment in cotton research and seed improvement, depriving farmers of modern
technology and high-yielding varieties. Lack of support price has shifted the farmers towards other crops, leading to a cut in cotton acreage.”
Published in Dawn, March 4th, 2025
