Growers plight and cotton woes

Cotton may look like a soft, fluffy and innocuous crop, but has earned the reputation of being the white gold given the bull run it experienced a few months back. But the commodity has lately taken the plunge with prices witnessing a nosedive. Having bid farewell to the price bonanza seen earlier this year, growers of the cash crop are now lamenting that amidst increasing costs of production, they are compelled to sell their produce at a loss. Last year, cotton production fell short by 3.5 million bales and the government ended up importing two million bales. Despite the rain scathing about 75 percent of cotton production in Sindh, the agriculturists still anticipate a bumper crop of 15 million bales this fiscal year. But the problems of cotton growers might render it hard to achieve this target. Growing prices of agricultural inputs like seed, electricity and fertiliser in particular pushed up cost of production to over Rs 2,700 per maund, according to Nabi Bux Sathio, General Secretary, Chamber of Agriculture. Growers, on the other hand, demand Rs 3,600 per maund in anticipation of bagging a bargained net price of roughly Rs 3,000 per maund. Presently, the growers are able to fetch Rs2,200-Rs2,300 per maund, according to Bux. In the local market, seed-cotton prices have averaged Rs2,800 per maund falling by about Rs200 per maund due to cotton quality concerns, whereas international prices normalised at Rs4,000 per maund for seed-cotton. Brokers and textile manufacturers opine that in spite of the increase in production costs, growers are making a presumptuous demand, especially after relishing the high prices internationally last year. The respite of 3.5 percent in the form of withholding tax to growers will not help settle their grievances as it would have a marginal impact of Rs100 per maund. Further, sources in the industry claim that given the heavy downpour and lack of incentive, the government might end up importing $4 billion worth of cotton this year. Overall, there are fears that the farmers might end up losing as much as Rs137 billion due to crop losses and high production costs. The concerns pledged by the growers are genuine, and if left unheeded, might jeopardise future cotton yield and farmers would be forced to revert to the production of other, more lucrative crops. Consequently, Pakistan runs the risk of losing its competitive advantage in growing cotton. Yet, support prices are a drain on budgetary resources, and at present, the government lacks the fiscal space to cater to such demands when the country is under pressure to gradually eliminate subsidies. The decision will have to be weighed in very tactfully.