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Dr. Khalid Abdullah
Cotton Commissioner Ministry of Textile Industry of Pakistan
Rapid expansion in cultivation of transgenic cotton which 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.
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.
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.
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.
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.
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