KARACHI: A continuous drop in cotton prices over the past week has plunged the local cotton market into uncertainty. Analysts warn that the surge in imported cotton, yarn, and fabric is severely impacting domestic cotton cultivation and the textile industry.
Mixed trends were observed at the New York Cotton Exchange, while Pakistan witnessed a record increase in imports of cotton, yarn, and fabric during the current fiscal year. This influx has driven local cotton and lint prices to historic lows. Chairman Cotton Ginners Forum Ahsan ul Haq predicts that if this trend persists, cotton cultivation could decline by 30-40% in 2025-26, posing significant challenges to the national economy.
The local textile industry faces severe issues due to a flood of imported goods and soaring energy prices. Industrialists argue that reducing production costs is impossible without slashing electricity and gas tariffs.
Head Transfer of Technology Central Cotton Research Institute Multan Sajid Mahmood said that there is an urgent need for a centralised Cotton Body to address systemic issues. “Heavy investment in modern research and technology, coupled with a comprehensive national policy spanning cotton cultivation to textile exports, is critical for sustainable solutions,” he stated.
The All Pakistan Textile Mills Association (APTMA) has reiterated its demand for a level playing field. Lamenting what it called lack of concrete action from authorities, its spokesperson warned, “If uniform policies for imported and local goods are not implemented, thousands of factories will shut down.”
Farmers and industrialists stress that without immediate price stabilisation, reduced energy costs, and import controls, Pakistan’s textile exports will face mounting pressure, further straining foreign exchange reserves.
During the past week, the local cotton market experienced an overall decline in cotton prices. Business activity remained limited as textile spinners showed greater interest in imported cotton, which offers better quality at lower prices along with the benefits of the EFS facility. Additionally, significant quantities of cotton yarn and fabric are being imported, whereas local cotton is subject to an 18% sales tax. To address this disparity, the Agriculture Tax Task Force of FPCCI and the SIFC have recommended measures to establish a level playing field. These include withdrawing the EFS facility on imported cotton, imposing import duties, or eliminating the sales tax on local cotton to ensure fair competition.
Last week, two cotton conferences were held in Karachi and Multan to promote the revival of cotton cultivation. The conferences, organised by PCCC and Better Cotton in Karachi, and PCCC and Cotton Connect in Multan, featured proposals and recommendations for early sowing of cotton, among other topics.
In addition, the Punjab Ministry of Agriculture is holding meetings and seminars to raise awareness among cotton farmers in the province. Reports indicate that early cotton cultivation has begun in some areas.
In Punjab, 10 lac acres of land have been allocated for early sowing of cotton. The government’s efforts to promote cotton cultivation are expected to boost production and support farmers in the province.
In Sindh, the price of quality cotton per maund and as per payment terms is in between Rs 16,700 to Rs 17,800. In Punjab, the cotton price remains in between Rs 17,500 to Rs 17,800 per maund. The Phutti is almost ended. In Balochistan, the cotton stock is also near ending.
The Karachi Cotton Association’s Spot Rate Committee reduced the spot rate by Rs 300 per maund, settling at Rs 17,500.
Naseem Usman, Chairman of the Karachi Cotton Brokers Forum, stated that international cotton prices are mixed, with New York cotton futures trading between 66.50 to 68.00 American cents per pound. According to the USDA’s weekly export and sales report, two lac forty four thousand and seven hundred bales were sold for the 2024-25 season. Bangladesh topped the list by purchasing fifty four thousand and one hundred bales, followed by Vietnam with fifty one thousand and six hundred bales. Turkey is on number third with thirty six thousand and seven hundred bales and Pakistan is on number fourth with twenty nine thousand and seven hundred bales.
For the 2025-26 Season, nine teen thousand and one hundred bales were sold. Honduras led with ten thousand bales, Mexico remained second with five thousand bales, and Pakistan secured third place with twenty three hundred bales.
APTMA is placing advertisements in newspapers and making appeals to the government through various means, but it says there is no one to listen. APTMA is such a large stakeholder, an organised and influential apex body for exports and employment, yet its position is so weak that it cannot get its legitimate demands resolved. Units worth billions and trillions of rupees are being shut down. The country’s textile sector is facing severe difficulties mainly due to the EFS facility (Export Finance Scheme) for imported goods.
The Chairman of APTMA said that currently 40% of mills have already shut down, and more are being closed daily. This indicates that in the coming days, additional mills, particularly spinning mills, will be forced to close due to losses.
Meanwhile, considering the cotton situation, expectations for an increase in cotton production are diminishing. Imported cotton, yarn, and fabric are being imported in large quantities under the Export Facilitation Scheme (EFS) facility. Given these circumstances, it appears the spinning sector in the country is in decline. If the government does not address this issue seriously, it will be too late.
Pakistan’s textile industry is demanding that the government provide affordable electricity, energy, and other facilities, similar to countries like India, Bangladesh, and Vietnam, to enable competition. Unfortunately, our textile industry is not providing financial or technical support to cotton research institutions, particularly the PCCC, nor investing in cotton revival or offering any financial assistance to farmers. In contrast, other countries are providing substantial financial and technical support to their research institutions and farmers.
The APTMA has urgently demanded the government create a level playing field for local raw materials and intermediate inputs for export-oriented manufacturing. The lack of implementation of the Export Facilitation Scheme (EFS) has pushed the country’s spinning industry to the brink of collapse.
The entire textile value chain is on the verge of being wiped out; it is only a matter of time. Over 100 spinning mills representing nearly 40% of total production capacity—have already closed, while the remaining mills are barely operational, running at less than 50% capacity.
Sajid Mahmood, Head of the Technology Transfer Centre at the Central Cotton Research Institute Multan said that given the severe challenges currently facing cotton, it must be acknowledged that achieving immediate successful outcomes through any conference or meeting related to cotton revival is not easy. Cotton revival is a long-term process requiring patience, persistence, and a comprehensive strategy. Government institutions are fully active in this regard, maintaining continuous consultations with various stakeholders and taking multiple steps to address the situation.
He emphasized that restricting competitive crops in the cotton belt under crop zoning, incentivizing farmers through practical measures to shift back to cotton, eliminating the role of middlemen to make cotton profitable, controlling seed and pesticide mafias, reducing the prices of agricultural inputs, and lowering production costs are all complex challenges that cannot be resolved overnight. These require a cohesive and sustained policy framework. To achieve this, all stakeholders must prioritize collective interests and formulate a unified cotton policy.
He further added that establishing a robust central cotton body, heavy investment in advanced research, and a comprehensive national policy to address persistent issues in the cotton industry are critical needs of the hour. Every stakeholder must play their part to implement concrete measures for cotton revival.
Organising conferences, workshops, and meetings is an essential step for cotton revival and should not be underestimated. These activities lay the foundation for lasting and sustainable reforms, bringing farmers, policymakers, and other relevant parties to a common platform to chart a path toward resolving challenges.
Regarding short-term government policies, promoting early cotton cultivation can yield immediate positive results, with evidence of success already available. Government institutions are fully engaged in this effort. Early cultivation of triple-gene cotton varieties can increase yield per acre, reduce production costs, and protect against pests like whitefly and pink bollworm. Early cultivation can help achieve a yield of 40 to 45 maund per acre, which would prove more profitable for farmers.
Furthermore, due to record imports of cotton and cotton yarn this year by textile mills instead of domestic procurement, there is a significant decline in cotton and lint prices in Pakistan, raising concerns about an unprecedented reduction in cotton cultivation this year. By 2025-26, Pakistan may have to spend billions of dollars on importing cotton and cotton yarn, along with several billion dollars on edible oil. Federal and provincial governments must eliminate the sales tax exemption on cotton and cotton yarn imports before launching campaigns to increase cotton cultivation. This will encourage textile mills to purchase domestic cotton, improve lint prices, and incentivize farmers to grow more cotton.
Ahsan ul Haq, Chairman of the Cotton General Forum, stated that the federal budget 2024-25 surprisingly exempted imported cotton and cotton yarn from sales tax while imposing an 18% sales tax on domestic purchases. Initially, international cotton prices were much higher than Pakistan’s, so imports remained low, and domestic cotton and lint prices were unaffected. However, after global cotton prices dropped due to various factors, export-oriented textile mills halted domestic purchases and began large-scale imports.
Copyright Business Recorder, 2025
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