Cotton: fall from grace?

While Pakistanis continue to find their national honour insulted by (slated) import of sugar and wheat of $500 million, their country is set to record cotton import bill three times that value. That would mean annual cotton imports of anywhere between $ 1.4 – 1.7 billion, assuming international cotton prices remain rangebound within historic range.

The notion that Pakistan has failed to develop its value adding exports but has a solid low-value commodity export base was a bit of a misnomer; for at least past decade, the country has been a net food/agricultural importer, as output of most of its mainstay crops have struggled to maintain self-sufficiency. The road to value-addition goes through productivity gains. Can those be achieved for high value addition products, without improving productivity of primary commodities? It cannot be emphasized enough that the loss of cotton acres is not a loss of farmers; as profit-motive economic agents, Pakistani farmers had shifted to more profitable crops such as maize, rice, and sugarcane long ago. But it is loss of precious foreign exchange. If the present trajectory continues – and it most certainly will, given MNFS&R’s reticence to allow adoption of next generation bt. technology - Pakistan will soon be importing more cotton than it produces domestically. And by some accounts, it already does, it is no secret that the actual weight of domestic bale is 155kg – much less than the officially reported 170kg.

The question then really becomes whether the country’s textile base – now allowed to import cotton freely – is geared up to make use of high-quality cotton. While a high degree of correlation exists between large net importers of cotton such as China, Bangladesh, Vietnam, and Turkey and quantum of value-adding exports, it is unclear whether more cotton is required to produce products such as readymade garments and knitwear that fetch higher unit prices in export market. And with a roaring domestic textile consumer market, it may help to know whether greater share of imported cotton will go towards serving local demand, or re-export needs.

The incremental $1 billion bill for import of raw materials such as cotton, sugar, and wheat in FY21 is not a matter of national shame. And if it fails to translate into incremental re-export earnings, it must not be met with knee-jerk responses such as tariff imposition to discourage import. It is however a matter of embarrassment for the agriculture policymakers, who have resoundingly failed to improve crop productivity in the face of burgeoning population growth, be it in dairy, wheat, or cotton.