Islamabad: Pakistan’s cotton industry is teetering on the brink of a widespread crisis, with policymakers under fire for negligence and ineffective strategies that have severely impacted the country’s agricultural backbone and textile sector.
The unrestricted flow of duty-free cotton and yarn imports has created a challenging environment for farmers, ginners and the entire textile value chain. Industry experts warn that this unchecked trend could lead to a crisis similar to the ongoing wheat disaster.
Ihsanul Haq, Chairman of the Cotton Ginning Forum, highlighted the similarities with the unrest witnessed in the wheat sector earlier this year. The government’s failure to procure wheat from farmers at the official price of Rs 3,900 per 40 kg and the subsequent market collapse has left farmers and mill owners in financial disarray. Wheat is now selling at an average of Rs 2,800 per 40 kg, causing huge losses across the supply chain.
A similar scenario is unfolding in the cotton sector. Haq noted that an 18% sales tax on domestic cotton and yarn purchases, in addition to duty-free imports, led to record import numbers.
According to Federal Bureau of Statistics (FBS) data, Pakistan imported 800,000 bales of cotton and 450,000 bales of yarn as of October 31, with the numbers rising to 1.1 million and 600,000 bales, respectively, by November 30. Textile mills have signed contracts for another 3.5 million bales, and total imports for cotton year 2024-25 are expected to exceed 5 million bales of cotton and 1 million bales of yarn, representing historic highs.
This increase in imports has led to the cessation of domestic cotton and lint sales. Large stocks remain unsold in warehouses and ginning mills, resulting in a significant decline in cotton prices. From their recent peak of Rs 18,500 per maund, prices have fallen by more than Rs 1,000 per maund, worrying farmers and industry stakeholders.
Haq explained, “The cotton market is witnessing a decline reminiscent of the collapse of wheat.” He warned that the decline in demand for domestic cotton could have disastrous consequences for Pakistan’s agricultural and industrial economy.
Haq urged Prime Minister Shehbaz Sharif to take immediate action by imposing sales tax on imported cotton and yarn while eliminating duties on local production. He stressed that these measures are necessary to revive the faltering cotton industry, support local farmers, and preserve billions in foreign exchange.
Without decisive intervention, experts fear the cotton crisis will worsen, putting one of Pakistan’s most vital economic sectors at risk.