Pakistan’s textile exporter slashes production amid cotton shortage, rising costs

In a concerning development for Pakistan’s critical textile sector, Ghazi Fabrics International Limited, a prominent textile exporter, has announced to curtail production activities citing difficult economic conditions and the unavailability of quality cotton.

The listed company, engaged in textile manufacturing, and production of cotton and PC yarn, shared the development in a notice to the Pakistan Stock Exchange (PSX) on Tuesday.

“Due to the prevailing economic conditions in the country, increase in power cost and non-availability of quality cotton at an affordable price, it is limiting production activities for the time being. Therefore, the company has decided to partially curtail production activities of its weaving unit till further notice,” read the notice.

“We will continue to monitor the situation for a future course of action,” added the company, which exports fabric to Europe, the USA, and the Far East.

Pakistan’s textile sector remains plagued with problems including a massive decline in cotton arrivals, a crucial ingredient for the industry.

Owing to dwindling cotton supply, the country’s cotton import bill is projected to reach $1.9 billion in the ongoing fiscal year (FY25), “which is 3.9x higher as compared to last year’s import bill of $448 million,” said Arif Habib Limited (AHL) in a recent report.

AHL attributed the decrease in cotton arrivals to “poor farmer economics and the delayed planting of the cotton crop”.

Last year, Pakistan imported 205,000 tons i.e. 1.2 million bales of cotton amounting to $448 million, said AHL. “For FY25, local production is anticipated to reach 6 million bales and imports are expected at 5.4 million bales,” it said.

Experts believe the decline in cotton production, a major cash crop and a critical raw material of the textile sector, is concerning for the South Asian country whose major exports are made up of textile goods, accounting for over 60% of Pakistan’s total exports.

Moreover, rising imports are likely to exacerbate the country’s balance-of-payment crisis, as it struggles to manage its foreign exchange reserves and sustain external debt.