Liberalization hampers cotton sector's growth

28 Feb '07

2 min read

Cotton industry, one of the major export products, started to decline once the liberalization took place in 1991.

Textile and clothing industries were mainly affected due to competition from synthetic, decrease in global price and profitability of cotton and cheap imports of second hand clothes.

As cotton yield is good in the region with law rainfall, it reduced the poverty in arid and semi-arid lands, which is 80 percent of the country.

According to estimates, around 350,000 hectares can be used for cultivation of cotton and 260,000 bales of lint can be produced annually.

At present, cotton is cultivated on 25,000 hectares and about 20,000 bales are produced annually.

Certain farmers also tried to reduce the cost by discontinuing the use of pesticides, but this method further resulted in low yields.

Shortage of ginneries is also major concern for farmers as only 60 percent of 24 privately owned ginneries are operational.

Liberalization also promoted second-hand imports, resulting in decline of domestic market.

But some of the experts believe that textile sector can recover from the situation with the help of African Growth and Opportunity Act (AGOA).

The African Growth and Opportunity Act (AGOA) was signed into law on May 18, 2000 as Title 1 of The Trade and Development Act of 2000.

The Act offers tangible incentives for African countries to continue their efforts to open their economies and build free markets.

President Bush signed amendments to AGOA, also known as AGOA II, into law on August 6, 2002 as Sec. 3108 of the Trade Act of 2002.

AGOA II substantially expands preferential access for imports from beneficiary Sub-Saharan African countries.

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