Pakistan witnesses 79.87% increase in cotton arrivals, easing economic crisis.

Pakistan has experienced a significant surge in cotton arrivals, with the total reaching 3.933 million bales by September 15, 2023. This marks a substantial increase compared to the same period last year when the figures stood at 2.187 million bales, indicating a remarkable year-on-year growth of 79.87%.

The latest data released by the Pakistan Cotton Ginners Association (PCGA) brings positive news for Pakistan, which has been grappling with one of the worst economic crises in its history. The bumper crop is expected to reduce the country’s import bill, providing much-needed relief to its struggling economy.

Earlier in March, the US Agriculture Department had forecasted a 36% rebound in cotton production to 5.3 million bales in 2023/24. This projection followed the damage caused to the 2022/23 crop by floods, with yields expected to return to trend levels. The report also noted that better returns from competing crops would limit the expansion of cotton cultivation.

The increased domestic crop is expected to curb the need for cotton imports, despite the many economic challenges facing Pakistan’s textile sector. Cotton imports had increased by about 7% during the first seven months of 2023/24 compared to the previous year, as reported by the US Agriculture Department.

As a result, the report highlighted that the textile sector would continue to face constraints on growth due to factors such as a lack of foreign exchange for importing raw materials and machinery, currency fluctuations, and rising energy prices. However, the surge in cotton production is expected to make textile sector products more competitively priced, especially in global markets.

Cotton arrivals in Sindh, Pakistan, have seen a significant jump, increasing by 2.15 times to reach 2.389 million bales. This resurgence comes after the previous year’s crop was devastated by historic floods.

In Punjab, there has been a 44% year-on-year increase in cotton arrivals, totaling 1.544 million bales.

Despite its status as an agri-based economy, Pakistan has been spending a substantial portion of its foreign reserves on importing food and other agricultural-related items. In 2021, Pakistan ranked as the fifth-largest importer of raw cotton globally, with imports amounting to $1.82 billion. Raw cotton also ranked as the eighth most imported product in Pakistan.

The boost in cotton production following last year’s record-low production is expected to alleviate the cost of production for the textile sector and help make its products more competitive in the face of rising inflation and production costs, ultimately benefiting the country’s economy.