EDITORIAL: It’s one thing for government after government to ignore arguably the country’s most significant cash crop and also the main driver of the export industry. But it’s quite another for the policy framework to actually harm it in favour of other crops, like sugarcane, that are more central to the needs of the political hierarchy.
After all, one big reason for the fall in cotton output is diversion of a lot of land towards production of things that make our political elite more secure about its personal portfolios. It’s for a reason that it is said that the sugar lobby is always in power regardless of whichever party is in government.
And the latest body to make a fuss about declining cotton output directly threatening the economic security of the country is the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), not the least because it feeds into the largest exportable product category — textiles.
It’s a shame that cotton production has been reduced to 6-7 million bales per year, down from 10-12 million bales, just as textile exports are set to cross the $20 billion mark in the outgoing fiscal year.
Pakistan’s textiles became much more competitive after the Covid lockdowns because the country was able to open up ahead of much of the competitors; and while the commodity supercycle in the international market played against us in items like oil, copper, etc., it also won us something of a windfall in textiles.
But, considering the circumstances, increasing demand for our textile products also increases our demand for import of raw materials because we are experiencing declining output of cotton at the worst possible time.
It turns out that importing one million bales of cotton costs the exchequer something like $1 billion and about 60 percent of the cost of producing textile products is attached to cotton. Therefore, even the simplest math suggests that producing more cotton, or at least reclaiming cotton production land lost to other products, will improve exports, increase revenue, strengthen foreign exchange reserves and the trade balance, stop the fall of the rupee and increase employment; among other things.
And the first thing that a cash-strapped, desperate government should do is devise actionable policies to reclaim the one million hectares of cotton production land that have been lost over the years, especially since experts are convinced that it would enable production of another 5 million bales and save $5 billion per annum.
It’s not just the loss of land that successive governments have turned a blind eye to. Stakeholders have also long lamented lack of official support and unavailability of certified and high-quality seeds, which means cotton produced within the country is of medium staple.
That is why long-staple cotton has to be imported to produce quality fabrics for export. The Karachi Cotton Association (KCA) believes that domestic and foreign demand might push up cotton requirement to something like 17 million bales, which would require import of about 10 million bales. Unfortunately, that might not be possible at the moment.
It’s bad enough that our export basket remains limited to a small list of items with little or no value addition; and even a record collapse of the local currency barely made exports budge by a few percentage points.
But it’s much worse that the country’s senior-most politicians have played an active part in letting our natural comparative advantage rot. Since we’re still a very long way away from adding either value or more items to our export mix, our best bet would be to improve the quantity and quality of what we do presently export. And it’s already shocking that no government has done much about it so far.
Copyright Business Recorder, 2022