Low cotton production to put more burden on forex reserves
LAHORE: As the government scrambles to save every dollar amid a severe foreign exchange crunch, experts have raised the alarm that cotton would also need to be imported as its production has fallen short of the target.
The textile sector has raised concerns that the country was facing an alarming decrease in cotton production which is unlikely to cross the five million bales mark. The figures by Pakistan Cotton Ginners Association (PCGA) revealed the country produced over 4.76m bales by Jan 31, against over 7.42m bales produced by the same time last year — a dip of 35.8pc or 2.66m bales.
To meet the gap between demand and production, Pakistan will have to import around seven million bales of cotton to meet the needs of local textile industries.
As per the PCGA data, Punjab produced more than 2.85m bales in 2022 against over 3.90m bales in the previous year – a loss of over one million bales.
Sindh produced 1.87m bales in 2022 against over 3.51m bales last year, a decline of 1.64m bales, mainly due to heavy rains and floods.
Textile spinners have so far purchased 4.175m bales, while in the previous year, they had bought over 7.233m bales during this period.
According to Karachi Cotton Brokers Forum Chairman Naseem Usman, the total cotton production in 2023 will be less than five million bales. The ginners have a stock of around 0.583m bales as compared to the last year’s stock of 0.171m bales, whereas 157 ginning factories are still operating to produce more lint.
Considering the requirement of textile mills, about seven million bales will have to be imported, he said, adding currently, agreements have been signed for the import of 5.5m bales.
On Feb 3, cotton rates in Karachi were being quoted at Rs22,000 per bale on Feb 3, against Rs19,700 on the same date last year.
Mr Usman said a further hike in rates was one the cards as mills were facing difficulty in importing white lint due to the US dollar’s appreciation against the rupee.
He added that the delay in the opening of letters of credit has already compounded supply chain issues.