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Cotton import bill set to grow

Sep '08
Pakistan is expected to import up to US $1.5 billion worth of raw cotton in this fiscal year (July-June). This is coming in the wake of an unprecedented growth in exports of cotton in the last few months.

In the previous fiscal year, Pakistan exported an estimated 272,924 bales of cotton. Shipments of cotton have grown by an astounding 236 percent in July and August of 2008 compared to the corresponding months of 2007. In July alone the sector exported 5,000 MMT of cotton which is a record figure for any given month.

But at the same time during July and August, the country imported raw cotton worth $93.65 million. The industry imported cotton worth $1.101 billion in the last fiscal when it faced a shortage.

The problem is more intense this year than last year. The import bill is also expected to shoot up, since prices of cotton have increased by 40 percent compared to last year on reports of a likely global shortage.

Cotton production in Pakistan for season 2008-09 is anticipated to remain below the level of 11.5 million bales which means it would be 2.5 million bales lower than 14.1 million bales' target set by the Government. This figure is lower than production figure of 2007-08 which stood at 11.7 million bales.

According to a September report of the International Cotton Advisory Committee, production of cotton in Pakistan has been falling with each passing year since 2004. Production of cotton which stood at 2.43 MMT in 2004 fell to 2.08 MMT in 2005 and further dropped to 2.07 and 1.84 MMT in 2006 and 2007 respectively.

It is said that Imports of cotton will have to be made at a time when foreign exchange reserves are very low.

The textile and garment sector contributes 60 percent of the overall baskets of exports from the country and industry experts say that and if the above amount of cotton is not imported it will lead to wide repercussions to the sector and to the country as a whole.

Two good reasons are being forward by experts in favour of importing cotton. A shortage of cotton in the domestic markets would lead to a slowdown in the industry and in turn affect exports. The second reason is that, not importing cotton would lead to a slowdown in the economy leading to wide spread unemployment.

They also add that the initial investment of precious foreign exchange in importing cotton is not so much compared to the amount of foreign currency the industry would generate by value addition and in turn exporting the products.

Fibre2fashion News Desk - India

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