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Interview with Dr. Khalid Abdullah

Dr. Khalid Abdullah
Dr. Khalid Abdullah
Cotton Commissioner
Ministry of Textile Industry of Pakistan
Ministry of Textile Industry of Pakistan

Rapid expansion in cultivation of transgenic cotton has helped increasing cotton
Dr. Khalid Abdullah, Cotton Commissioner, Ministry of Textile Industry of Pakistan, shares some essential facts about the global as well as Pakistan’s cotton market in an interview with Fibre2Fashion Correspondent Manushi Gandhi. Synopsis: The Ministry of Textile Industry of Pakistan is a government body which works in favour of the textile producers in the country. Over the time it has formulated many good policies to benefit this industry. Textile sector in Pakistan generates the highest export earnings of about 55%; providing the bulk of employment (39%), and contributes 8.5% to GDP. Dr. Abdullah is the Cotton Commissioner under Ministry of Textile Industry of Pakistan since 2010. He is responsible for Planning Policy and Coordination of all cotton stakeholders of the country and abroad. As the Cotton Commissioner, he also looks after the production parameters and indicators, and recommends the appropriate policy to the government. Excerpts:

Pakistan being world’s fourth largest cotton grower in the world, what are current cotton import and export trends in Pakistan?

Yes, it is very rightly said that Pakistan ranks fourth in world cotton production after China, India and United States of America. The country’s annual average cotton production hover around 12 million bales (170 kg) during the last decade whereas demand of cotton by the local textile industry is around 15 million bales. Hence, the shortfall is met through import of long and extra long staple cotton. The textile industry continued to flourish over the years with the rise in cotton production and currently 447 textile units are operating in the country. The exports of textile products remained US$ 10.5 billion during the year 2012-13 which is 55 percent of total foreign exchange earnings. The major textile exported items are Cotton Cloth (US$ 2.46 billion), Cotton Yarn (US$ 2.05 billion), Knitwear (US$ 1.84 billion), Bed Wear (US$ 1.63), Readymade Garments (US$1.64 billion), Towels (US$ 0.714 billion) and lastly raw cotton exports was only US$ 0.146 billion. The rise in exports of textile made-ups and the decline in exports of raw cotton show that the textile industry is moving towards producing value added products. The exports are largely marketed to the United States of America (15.1%), followed by UAE 10.1%, UK 5.4% and Germany 4.8%. The rest of around 70% exports are concentrated to other countries. This improvement in geographical diversification was mainly the result of the Strategic Trade Policy Framework (STPF-2009-12) and the resulting increase in exports to China, Afghanistan and Bangladesh. The government is concentrating to diversify its exports not only in terms of commodities but also in terms of markets. Heavy concentration of exports in few commodities and few markets can lead to export instability. The efforts of government in lessening power crisis and the assurance of un-interrupted supply of electricity and gas to textile industries will also pave way for achieving the export target of US$ 14 billion in textile products. The recent grant of Generalized System of Preferences (GPS) Plus status by the European Union on import of 75 items is also expected to fetch around US$ 1 billion more to the country. With the rise in population, the demand for cotton is increasing while the production is not increasing with the pace of consumption. To meet the gap of local consumption and producing exportable items, the textile industry has to import an average of 1.5 to 2.0 million bales annually. The raw cotton is mainly imported from India, USA, Brazil, Afghanistan and Greece. During the year 2012-13, the industry imported raw cotton worth of US$ 0.752 billion.
 

As of now, what is the greatest challenge for the cotton producers across the globe?

• Limited access to advanced seed technology. • Rising cost of inputs especially seed, fertilizer, agro-chemicals etc. are pushing farmers towards alternate crops which give better returns. • Global warming (rising temperatures, heavy rains/floods) affect cotton production . • Provision of government support to cotton farmers in advanced countries affecting cotton production in less-developed countries. • Stagnation in cotton yields despite use of advanced technologies • Increasing fibre mix suppressing cotton demand and lowering prices. • Widening gap between cotton supply and rising demand • And last but not the least is the decreasing comparative advantage over other crops, especially in developing countries.

For cotton, competition with polyester is a powerful challenge that is accelerating as chemical fibre production technology results in lower costs of polyester production. How do you think the cotton sector can overcome the challenges posed by polyester fibre?

The increased use of synthetic fibre started from 1970 and currently gaining share of almost 70% in all fibre consumption in world trade. The International Cotton Advisory Committee (ICAC), USA projected that world cotton production is approaching to its physical maximum. Moreover, per capita demand for fibre is increasing with the increase in global population. Therefore, synthetic fibre production which is greater than cotton production is fulfilling the increasing demand for fibre. It is projected that by the year 2020, the polyester production will be 2.5 times greater than the cotton production. China is the leading polyester fibre producing country. High cotton prices have also encouraged substitution with polyester fibre. Although, the polyester fibre has dominated over cotton fibre but cost and availability still play an important role in inter-fibre competition. During the years when oil prices rise and cotton production increased, the demand for polyester fibre declined in those years. The higher prices of cotton make recovery of demand for polyester fibre. Increase in cotton production with its lower prices will suppress the demand for polyester fibre. The rising oil prices also expected to discourage new investments in production of polyester fibre which will create opportunity for cotton production. There is a need to increase cotton acreage for enhancing cotton production and reduce the cost of doing business of cotton production. Cotton which is raw material of textile industry, but more importantly a major source of livelihood for millions, providing raw material to number of industries and a major source of foreign exchange earnings for many countries.

What is the latest cotton arrival situation n Pakistan? How is the arrival compared to this season's cotton production target?

The cotton arrivals into ginneries by November 15, 2013 remained 9.518 million bales compared with 8.519 million bales during same period last year depicting 11.73 % more than during the period under report. This is against the target of 11.96 million bales for the year 2013-14.

The economies across the globe are facing a tough time. In such a situation, what are the challenges faced in cotton marketing and selling?

Pakistan consumes more than 95% of its production, however for marketing of its semi finished and finished textile products has remained challenge as global economies are suppressing. The local textile industry is facing challenges like power shortage, unavailability of trained manpower, unpredictable prices etc which are major hindrance in compliance by the exporters to their buyers. Default of contracts is another global issue making the cotton market fragile. However, I personally think standing on your commitment and no compromises on quality is the best tool to deal with global recession and gaining the customers confidence. The industrialists of Pakistan are very close to my heart, as I see them struggling for power issue, they have all the power generation sources installed to honour commitments of deliveries. Their production cost has risen due to investments in power sources.

Pakistan’s target was to harvest 13.26 million bales this year. How far the country has been able to achieve this target?

The cotton production target for the year 2013-14 was fixed at 14.102 million bales (170 kg) each by the Federal Committee on Cotton (FCC) during its meeting held in February 2013. The cotton area was targeted for major cotton producing provinces as 2.428 million hectares for Punjab province and 0.651 million hectares for Sindh province. However, the target of cotton planting could not be achieved due to severe shortage of irrigation water both in Punjab and Sindh, prevailing lower prices of cotton, higher return for maize, rice and sugarcane crops, and increasing cost of inputs. Moreover, the country also witnessed heavy rains during August-September which has led to damage of around 4.55% cotton area in Punjab and 5-10% in Kaccha (river bed) area of Sindh province. Keeping these factors in count, the cotton acreage was 10% and 12% less than the envisaged target for the Punjab and Sindh provinces, respectively. Persistent hot weather resulted in flower and fruit shedding in cotton crop in addition, dry spell, encouraged sucking pests like thrips and whitefly aggravated the fruit shedding. Similarly, Pink bollworm and Mealybug attack was also witnessed on large cotton area in Sindh province. Keeping in view the factors of less sown crop, area damaged due to floods/rains, climate change effect, the Cotton Crop Assessment Committee (CCAC) of the Ministry of Commerce & Textile Industry estimated the cotton crop size to the level of 11.958 million bales (Punjab 8.7 million bales, Sindh 3.15). So far 9.5 million bales (Punjab 6.2 million bales, Sindh 3.3 million bales) has been arrived, as on November 15, 2013 which is 11% higher than that of last year.

How do you think the quality of cotton produced in your country differs from the rest?

The silver fibre mainly cultivated in Punjab (70%) and Sindh (30%) provinces. The varietal approval system adopted in the country is systematic and never compromise on quality parameters. The entire cotton production of the country comes under Long Staple group as most of the cultivated varieties have staple length of 27-28mm, but we are identifying pockets suitable for extra long staple to meet the industry’s demand of ESL , which at the moment is being imported. Although in Pakistan’s entire cotton is handpicked and hot-dry weather favours production of better colour cotton but still contamination is main concern of buyers of Pakistani cotton. We have made necessary changes in Cotton Control Ordinance 1966 for cotton standardization, Farmers are being educated for avoiding polypropylene or jute bags for cotton collection or transportation using various extension services. Recently, female agriculture officers (extension agents) were trained as master trainer and engaged for training of cotton pickers in cotton fields. Pakistan Cotton Standardization Institute (PCSI) actively engaged in testing of quality characteristics through its network of testing facilities across the cotton belt. The testing facilities are equipped with latest instruments. The well trained field staff of PCSI is always available during the cotton season for facilitation in seed cotton classification and testing of lint produced. PCSI has its own schedule of classer’s training for ginning industry. Using “Push” and “Pull” principle, the textile industry is also approached to offer reasonable premium for contamination free quality cotton to encourage the grower and trader to take care of quality parameters. Even by doing all this there is room for improvement in quality cotton production and we are thriving hard to achieve.

The area under cotton cultivation is decreasing across the globe. Do you think it is a matter of worry?

According to the International Cotton Advisory Committee (ICAC), USA, the world average area stood at 32.620 million hectares (1980-1990), 30.240 million hectares (1990-2000), 32.623 million hectares (2000-2010) and average cotton area for this decade has also been projected to be 33.808 million hectares. So, the historical trends clearly depict that world cotton acreage during the last four decades remained almost the same with slight change. Moreover, cotton is in competition not only with synthetic fibre but also with food crops as well, which has competitive advantage over cotton. Rise in population with expansion in urbanization is also leading to shrinking of crops area including the cotton crop and more area for food crops to feed the growing population. Ministry of Commerce & Textile Industry, Government of Pakistan is taking measures for boosting cotton production in the country. For the purpose, The Government is also taking steps for enhancing cotton acreage especially in Balochistan and Khyber Pakhtunkhwa provinces. Pakistan Central Cotton Committee (PCCC) is strengthening its network of Cotton Research Station in these provinces for testing of cotton varieties in these agro-ecological zones.

How receptive are the Asian markets to Bt cotton? How do you look at its growth prospects in Pakistan as well as Asia?

The rapid expansion and adoption of Bt cotton clearly depicts benefits occurring from this technology. The one example of India is with us whose cotton production rose from 2.380 million metric tons during the year 2000-01 to 6.00 million metric tons during the year 2012-13 with the use of this technology. With the rise in cotton area under Bt varieties, the production also rose substantially. Bt cotton has not only helped reducing cost of plant protection for control pests besides increasing production as well. Pakistan is no exception left behind in getting benefit from this technology. The country harvested ever highest production level of 14.8 million bales during the year 2011-12 and is sustaining production to the level of 12 million bales during the last decade mainly because of cultivation of Bt cotton varieties on larger area. The lint yield per hectare has also rose from 571 kg / ha (2003-04) to 785 kg/ha (2011-12) and 727 kg/ha during the year 2013-14. Similarly, with the increased production, textile exports have also jumped from US$ 8.4 billion in 2003-04 to US$ 11 billion in 2012-13 and expected to reach US$ 14 billion or more during 2013-14. The Ministry of Commerce & Textile Industry is also in the process of negotiating with M/s Monsanto and other multinationals for acquiring transgenic cotton technology with advanced genes for enhancing cotton productivity of the country. The prospects of application is transgenic technology will further improve in the coming years in solving issues related to crop production.

What are the latest technological advancements which have helped the cotton industry/sector?

Rapid expansion in cultivation of transgenic cotton which has helped increasing cotton production, reducing input cost of pesticides and above all enhancing returns. The benefit of the technology is evident from its rapid adoption. The research work is underway for exploring new traits for enhancing cotton production by using this technology. Water being a scaring resource was given due attention and water saving cotton production technology “Bed Furrow” introduced and cotton grower adopted it very rapidly. Other water saving methods like drip/sprinkler irrigation system are also under trial for cotton production. Realization of micronutrient deficiency by the growers and they are getting benefit by applying micronutrient at various stages of plant growth. Automation and other advancement in ginning process not only improved its efficiency, saving fibber, but also reducing cost of doing business by optimizing the power input. Development and introduction of efficient and accurate testing equipment helped the cotton sector a lot.

What can you predict about prices of cotton in the international market in the near future?

World cotton market is mainly influenced by the production and consumption pattern of major cotton producing countries, especially trade policy of India and China’s policy for reserves also affect the cotton market. The International Cotton Advisory Committee (ICAC) has projected a decline in cotton production in China and India in the coming few years, while consumption in China, India, Pakistan and other countries is on consistent rise. Moreover, cotton prices are also affected by government support programmes especially in the United States and continuity of subsidy by various countries. This support price mechanism affects cotton production substantially in less developed areas. A group of developing and least developing countries (Like minded Group) have also complained in the World Trade Organization against United States for provision huge amount of support measures to cotton farmers. Keeping in view, the projected reduced supply during 2014-15 (China 6.7 to 5.95 million tons, India 6.47 to 6.25 million tons), higher consumption (India 5.10 to 5.51 million tons, Pakistan 2.4 to 2.6 million tons), predicted abnormalities in climate change, the prices are supposed to be slightly changed upward. However, China which remained biggest importer is projected to import 1.94 million tons during 2014-15 compared with 3.14 million tons during current year whereas its beginning stock are also projected to shrink from 9.6 million tons during 2013-14 to 2.0 million tons during 2014-15. It is also expected that China intends to utilize its large reserves of around 10 million tons which is more than half of stocks of world. If this reserve is going to be utilized by the Chinese coupled with lesser imports, this will also impact the prices on world level to remain slightly a bit on higher side in the mid $1.30s (as projected by Cotton 24/7). The Cotlook A index is 84.75 cents/lb as on 12.11.2013 compared to 79.50 cents/lb same date last year. Similarly the New York Cotton Futures have also quoted future contracts for December 2013 at 76.97 cents/lb and March 2014 at 78.20 cents/lb which is also depicting higher price trends compared with last year’s contracts (69.58 and 70.44 cents/lb). The lint prices in local market announced by the Karachi Cotton Association also remained higher at Rs.6966 per 40 kg compared with Rs.6269 per 40 kg same date last year. The volatility in cotton prices and increasing percentage of non-cotton fibre is also suppressing cotton market. The share of non-cotton fibre has jumped to 60% or even more, while cotton share in all fibre shrinked to 40% or even less.
Published on: 28/11/2013

DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of Fibre2Fashion.com.

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