Running head: The cotton industry in Pakistan and its export potential.

The cotton industry in Pakistan and its export potential.

Abdullah Mohsin

251684119

WRCM 102

Ma’am Rabia Wasif

May 9, 2022
The cotton industry in Pakistan and its export potential. 2

Abstract

Lack of knowledge among farmers and exporters about developments and emerging trends in the

cotton industry is the main obstacle to Pakistan's cotton exports. To grow their exports and grab

the attention of buyers from across the world, exporting nations, like other countries, are

introducing new cotton varietals and making innovations and development in the cotton

industries every day. Pakistan is a third-world nation; hence it faces a shortage to implement

innovative farming techniques and so cannot grow production. The government is not helping

farmers with subsidies, improved equipment, or innovative fertilizers as farmers cope with

problems like water logging. The primary source for this research is Major Commodities of

Pakistan-Cotton by Pakistan Institute of Development Economics, Islamabad. The main

objective of this research is to inform the local population about cotton exports and any related

complications. This might encourage the government to speak out for exporters and increase

cotton exports.
The cotton industry in Pakistan and its export potential. 3

Introduction

Agriculture is the backbone for every country. Economic stability depends a lot on the

export of these agricultural products. As for Pakistan, it is blessed with many seasons and the soil

is fertile, we can cultivate a variety of agricultural items. Cotton plays a significant role for

economy of Pakistan. It helps to meet the domestic demand and pays a considerable amount of

foreign exchange for the country every year. Pakistan's textile industry is the country's largest

manufacturing sector. Pakistan is Asia's sixth largest exporter of textile products. Pakistan's

textile industry accounts for 8.5 percent of the country's GDP. Furthermore, the industry employs

around 45 percent of the country's overall workforce (and 38 percent of the manufacturing

workers). Pakistan is the world's fourth-largest cotton grower, with Asia's third-largest spinning

capacity after China and India, accounting for 5% of worldwide spinning capacity. There are

now 1,221 textile ginning units, 442 spinning units, 124 big spinning units, and 425 small

spinning units. In the article some physical and economic determinants of cotton production in

west Pakistan, Ghulam Muhammad discussed all the area covered by cotton crops in west of

Pakistan and the major difficulties faced by farmers while cultivation of cotton. Moreover, he

talked about cultivation of cotton from ancient types and the diverse types of cotton. Asiatic and

American both are cultivated in Pakistan. Both cotton types are exported worldwide particularly

in Japan and USA. Major commodities of Pakistan-cotton from the source Economic Digest, Vol

3, No. 4 9 WINTER 190. In this article author observed the major cotton producing countries like

USA, USSR, India, Brazil, China, Bangladesh, Egypt, Mexico, and Pakistan. 5% cotton is

produced in Pakistan. The total consumption of cotton worldwide is estimated to be 42.6 million

bales. Global market report: cotton by Vivek. In this article the writer discussed the major

advantages and uses of cotton. Cotton is widely used as a natural fabric and textile. Cotton is the
The cotton industry in Pakistan and its export potential. 4

most used natural fiber in textiles, accounting for one-third of all fibers produced globally.

Cotton seeds are crushed to produce cholesterol-free oil, which is used in cooking as well as in

cosmetics, medicines, and personal care items, as well as other industrial uses including

polymers and rubber. Cotton seeds are also used to make a high-protein meal for animals and

fowl. Cotton and Cotton Textile Trade by Shahid Zia. This article is all about the history of the

cotton industry and its export according to this article Cotton yarn remained the cotton group's

most important export item. It controlled 25% and 22% of export earnings in 1996-97,

respectively. Higher-value-added products, such as ready-to-wear clothes, accounted for 13.2

percent of the total. So, my research paper is all about cotton industry and potential of export.

This paper will also be answering the following questions.

• The importance of the cotton industry.

• What role does the cotton sector play in Pakistan's economic development?

• Important steps the government should take to increase the export of cotton.
The cotton industry in Pakistan and its export potential. 5

Literature review

Pakistan is an agricultural country. Agriculture is the backbone for every country.

Economic stability depends a lot on the export of these agricultural products. Cotton is a kharif

crop in Pakistan cottons around 65% of cotton is grown in Punjab, which has suitable condition

for its growth. Cotton's and its products' significance to Pakistan's economy is self-evident.

Pakistan's primary cash crop is cotton. It accounts for one-fourth of the value of Pakistan's

principal crops and employs 5 million people. It is a raw material for the textile industry, which

is the single largest industrial activity, accounting for 48 percent of the value contributed and 27

percent of employment in large-scale manufacturing. The installed textile machinery complex

accounts for about 15% of the country's total industrial investment. Cotton and cotton-related

items account for over half of Pakistan's total export revenue.

In the article Some Physical and Economic Determinants of Cotton Production in West

Pakistan by Ghulam Mohammad. The author stated about the total growth of cotton and the

problems faced by agricultural sector in west Pakistan. according to this article there is no

increase in the growth of cotton industry from the last 25 to 30 years due to Rising ground water

level in canal-irrigated areas of West Pakistan, which could make cotton cultivation physically

more difficult and less profitable for farmers. Cotton's relative price has dropped in compared to

other crops, increase in cotton export taxes, the author also discussed about the effects of water

logging on cotton production. Cotton has a deeper tap root system than most other crops. The

roots of desi cotton cultivated in West Pakistan usually reach a depth of 6 feet, but the roots of

American cotton reach a depth of 6.5 feet. Sugarcane maize, jawar, and bajra, among the other

summer (kharif) crops, have shallow fibrous roots that penetrate to a depth of around 2 to 3 feet.
The cotton industry in Pakistan and its export potential. 6

As a result, a rise in ground water is more likely to affect cotton than other kharif crops. So, the

west Pakistan is divided into three major cotton producing areas

The old canal colonies of the former Punjab

The Multan District of the Punjab and State

The left-bank areas of Sind and the formal Khairpur state

In the article: Cotton and Cotton Textile Trade by: Shahid Zia. In this article the author is

discussing the exports of cotton and their impact on economic growth and the trade policy of

Pakistan. Pakistan is the third largest exporter of raw cotton and the world's largest exporter of

cotton yarn. Cotton and its derivatives are the country's biggest foreign exchange earners. In

1996-97, their share of export earnings was 66.6 percent. Cotton yarn remains the cotton group's

largest major export commodity. It controlled 25% and 22% of export earnings in 1996-97,

respectively. Higher-value-added items, such as ready-made clothing, accounted for 13.2 percent

of the total. The largest purchasers of cotton yarn and fabric are Hong Kong, China Hong Kong

USA, UK, Australia. Cotton is grown on about 30 million hectares in over 80 countries. It is

grown on 2.8 million hectares in Pakistan, out of a total cultivated area of 20 million hectares. It

generates more than half of our foreign exchange income. Cotton has been used by 281 textile

factories, 991 ginneries, and 281 oil expellers. The number of indigenous oil expellers is

believed to be between 15,000 and 20,000. (kohlus). Cotton-based industries employ almost a

third of the industrial workforce. Cotton growth is inversely related to the country's overall GDP

growth. Cotton is Pakistan's most significant agricultural crop. It is a cash crop as well as a low-

cost raw resource for industry. Cotton-based industries employ one-third of all industrial

workers. Moreover, our export industry's cotton and textiles industry are the most active. More
The cotton industry in Pakistan and its export potential. 7

than half of Pakistan's foreign exchange earnings come from the export of raw cotton and cotton

goods. Cotton production and exports have varied throughout the last decade due to a mix of

policy shifts and a lack of policy clarity. To increase cotton growth, the government removed all

import and export limitations in the late 1980s. As domestic prices converged with the

worldwide price of cotton, there was a gradual increase in domestic pricing.

Major Commodities of Pakistan-Cotton by Pakistan Institute of Development Economics,

Islamabad. This article is all about the history of the cotton industry in Pakistan. The United

States of America, the Soviet Union, India, Brazil, China, Egypt, Pakistan, Mexico, Uganda,

Nigeria, and Tanganyika are the largest cotton producers. Production of cotton in Pakistan

contributes for almost 5% of world exports. Cotton is mostly exported from the United States,

Mexico, Egypt, Brazil, and Pakistan. The major importers are Japan, the United Kingdom, the

Federal Republic of Germany, France, and Italy. Pakistan is recognized because it is the origin of

farmed cotton, which was done by hand in ancient times. The little pieces of cloth discovered at

Mohenjo-Daro, which bloomed between 3,300 and 2,700 B.C., were made of local cotton,

according to archaeological excavations. The yarn used has a count of up to 34. The origins of

modern cottons in Pakistan began in the twentieth century, when significant attempts were made

to adapt American Upland seeds in the canal irrigated region of West Pakistan, and commercial

cultivation of the American kind, known as Punjab-American, started. The quality of cotton

farmed in the Indus Basin has increased significantly because of research, irrigation, and

improved agronomical practices. Many varieties have been developed and are now commonly

cultivated.
The cotton industry in Pakistan and its export potential. 8

Global Market Report: Cotton by Vivek Voora. This article is about the uses and

importance's of cotton. Cotton is the most used natural material in textiles, accounting for one-

third of all fibers produced worldwide. It may be used to create a variety of fabrics that are

strong, moisture absorbing, and comfortable. It is well known for its versatility, performance,

and comfort. 47 Its uses, however, are not restricted to textiles. Cotton plants produce lint and

seeds, which are used to make fabric, oil seeds, and livestock feed. More specifically, fabric is

derived from cotton lint, having 64 percent of the fiber produced going to clothes, 28 percent to

home furnishings, and 8% to industrial uses. Cotton is indeed a major contributor to the global

textile mills and apparel manufacturing industries, which were valued at USD 748 billion and

USD 786 billion, accordingly, in 2016.Cotton also supports a USD 3 trillion global fashion

industry, which includes outfits with unique designs from well-known brands, with global

apparel sales reaching USD 1.3 trillion in 2016 Cotton is an exporting crop, even though it is

mostly cultivated in the major producing countries, like Asian countries, to produce textiles and

clothing. To increase the value addition of domestic textile industries, there has been a global

shift in exporting cotton yarn and human-made fibers rather than raw cotton in recent times.

12,49 Over 30% of global raw cotton cultivation, or 8.8 million tones, was exported in 2017,

with a value of USD 13.5 billion. 9,50 China and India were the top exporters of cotton (raw

cotton, cotton yarn, thread, and woven fabrics in 2017. (USD 15.1 billion), The top selling

countries in 2017 were China (USD 8.6 billion), Bangladesh (USD 5.3 billion), and Vietnam

(USD 4.7 billion), whereas the top importing countries were China (USD 8.6 billion),

Bangladesh (USD 5.3 billion), and Vietnam (USD 4.7 billion) (USD 4.2 billion).
The cotton industry in Pakistan and its export potential. 9

Methodology

The primary source for this research is Major Commodities of Pakistan-Cotton by

Pakistan Institute of Development Economics, Islamabad and this source will be textually

analyzed via the qualitative method of research. The data collected is from print as well as online

sources, internet, c- libraries, etc.

The cotton industry in Pakistan and its export potential. 10

Discussion

The majority of Pakistan's economic activities depend on the export of agricultural goods,

and the country's agricultural industry significantly depends on important commodities like rice,

cotton, maze wheat, etc. Agriculture has a significant role in Pakistan's economy. This sector

generates 26% of the nation's GDP while directly benefiting the people. Among the most

significant crops in agriculture are cotton, wheat, rice, sugarcane, fruits, and vegetables.

Pakistan's agricultural production is supported by one of the largest irrigation systems in the

world. There are two distinct growing seasons in Pakistan, with the cotton, rice, and sugarcane

seasons beginning in May and ending in November, and the wheat season lasting from

November to April. The efficient use of resources, especially land and water, seems to be a

highly significant necessity for raising agricultural output. It is difficult to undertake significant

adjustments since landowners, who control most irrigation systems and 40% of the agricultural

land, are mostly to blame for the transition. Pakistan is a net importer of cotton products with

yearly imports of over 2 billion USD, including wheat, edible oils, pulses, and food additives.

Pakistan is the world's top producer of raw cotton, which is another one of its cash crops.

Pakistan was the fourth-largest cotton producer in 2011–2012, contributing 9.81% to global

cotton production. Over the same year, Pakistan's yarn exports contributed 26.1 and 14.3 percent,

respectively, to the global market. Cotton made up 46% of Pakistan's total exports, and it also

provided jobs for 35% of the working force (FAO., 2012, GOP., 2012). According to the

country's current agricultural plan, the Pakistan Central Cotton Committee wants to increase

cotton production from 40% to 60%. (PCCC, 2008). According to the country's current

agricultural plan, the Pakistan Central Cotton Committee wants to increase cotton production

from 40% to 60%. (PCCC, 2008). A shortage of irrigation water, however, appears to be one of
The cotton industry in Pakistan and its export potential. 11

Pakistan's main problems with agricultural output, according to some statistics. However, other

analysis shows that a shortage of irrigation water is one of Pakistan's main problems with

agricultural output. Farmers frequently employ flood irrigation to supply water to furrowed

fields, which has a negative impact on agricultural water output (Kahlown et al., 2007). Pakistan

is the world's top exporter of cotton yarn and the third-largest exporter of raw cotton. The largest

sources of foreign exchange earnings for the nation are cotton and its derivatives. Their portion

of export revenue in 1996–97 was 66.6 percent. The principal export product for the cotton

group is still cotton yarn. In 1996–1997, it controlled 25% and 22% of export revenues,

respectively. 13.2 percent of the total came from higher-value products like ready-made

garments. The biggest consumers of cotton yarn and fabric are Hong Kong, China, the United

States, the United Kingdom, and Australia. About 30 million hectares of cotton are cultivated

throughout more than 80 nations. Out of the 20 million hectares that are used for cultivation, it is

grown on 2.8 million of those in Pakistan. More than half of our income from foreign exchange

comes from it. 281 textile mills, 991 ginneries, and 281 oil refineries have all used cotton.

Between 15,000 and 20,000 local oil expellers are thought to exist (kohlus). One third of the

industrial workforce is employed by industries dependent on cotton. Growth in the cotton

industry is negatively correlated with growth in the national GDP. Pakistan's most important

agricultural product is cotton. It is both a cash crop and a cheap source of raw materials for

industry. One-third of all industrial workers are employed by cotton-based enterprises.

The cotton industry in Pakistan and its export potential. 12

Conclusion

Although Pakistan is already the world's top exporter of cotton, there is now more

competition among cotton producers. Governments in Pakistan are not trying to enhance cotton

exports. Therefore, to boost their total productivity, farmers and exporters must act on their own,

such as using new farming techniques. To compete against global rivals, other nations like China

and India are producing new cotton kinds that are more resistant, higher-quality, and

significantly less expensive. The government must be required to provide farms with subsidies

and simple loans so they may use better fertilizers and other modern techniques and

technologies. which will help the cotton industry to grow and produce better quality cotton.

Therefore, Pakistan should likewise focus on similar developments for the benefit of cotton

export in the future. As an agricultural nation, Pakistan is heavily dependent on the export of

agricultural goods, and its economy would benefit if exports rose in the future.
The cotton industry in Pakistan and its export potential. 13

References

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West Pakistan. The Pakistan Development Review, 3(4), 491–526.

https://doi.org/10.30541/v3i4pp.491-526

Major commodities of Pakistan-cotton - JSTOR. (n.d.). Retrieved June 30, 2022, from

https://www.jstor.org/stable/41242978

Global market report: Cotton - jstor.org. (n.d.). Retrieved June 30, 2022, from

https://www.jstor.org/stable/resrep26555

Rehman, A., Jingdong, L., Shahzad, B., Chandio, A. A., Hussain, I., Nabi, G., & Iqbal, M. S.

(2016, November 19). Economic Perspectives of major field crops of Pakistan: An empirical

study. Pacific Science Review B: Humanities and Social Sciences. Retrieved July 1, 2022, from

https://www.sciencedirect.com/science/article/pii/S2405883116300569