By Ismat Sabir
According to the assessment of the United Nations, over 1.31 million hectares of the cultivated area has been destroyed by floods in the four provinces and Azad Kashmir, which might compel the country to import many agricultural products including cotton. The total agriculture sector losses are estimated to be about Rs 249 billion.
Due to flood damage to Pakistan's cotton crop for the 2010-11 season, the officials estimate that the country may import 3.5 to 4 million bales. Major distortion took place in major cotton-growing areas of the central Punjab and southern Sindh.
According to a Food and Agriculture Organisatrion (FAO) report, the highest losses were recorded in Punjab where about 661,637 hectares of land with standing crops destroyed. In Sindh, crops on about 357,372 hectares and Khyber Pakhtunkhwa (KP) about 191,020 hectares were damaged.
Two million bales have been destroyed in the floods in Punjab. Worst hit areas are Mianwali, Bakkhar and Layyah, apart from many other areas in southern districts of Punjab. In Sindh, Nawabshah, Sukkur, Ghotki, Khairpur and Naushero Feroze are the most affected areas.
Floods across the country have mostly affected the small farmers bearing a share of about Rs 98 billion and some of them have totally lost their crops.
A report revealed that maximum damage by the floods has been made to the minor crops of Kharif season, which includes jawar, maize, moong and mash pulses and some citrus fruit. These minor crops are mainly cultivated by small farmers and in areas where growers have small land holdings. They also lost considerable number of livestock. The ministry's report indicated that among the major cash crops the largest loss of Rs 73 billion was seen in the cotton crop.
The estimated loss to the cotton crop in Punjab and Sindh stood is more than Rs 75 billion, according to Pakistan Cotton Ginners Association (PCGA). In terms of value, the cotton crop faced more than 30 percent of the total losses to major crops in the recent floods. The association said the floods have affected about 600,000 hectares of cotton growing areas in the country. Cotton crop was sown on 3.4 million hectares, out of which 0.6 million hectares, or 2.5 million bales, had been destroyed. Now the production would be about 12.5 million bales against the target of 14.5 million bales in crop season 2010-11.
According to a report of the agriculture department at least 438 acres cotton (seed cotton) crop was damaged by the floods out of total 1,483 acres sown, depicting a loss of at least Rs 32,129 million.
Contracts for about 1.2 million bales had already been made for October-January delivery and more contracts would be done in November. About 50 percent of the cotton would be purchased from India because of lower transport costs. India is the world's second largest cotton exporter. Cotton would also be bought from West Africa and from the United States, Brazil and the Central Asian states.
This year cotton output in India reached at a record level of 32.5 million bales, but the country will only allow cotton exports of up to 5.5 million bales. India has permitted cotton exports without licences - only registration process will be required and will come into effect from October 1, 2010, when the cotton year begins.
India abandoned export registration on April 19 and allowed exports under licence on May 21 to rein in prices. India is likely to produce 31 to 33 million bales of cotton in 2010-11, 29.5 million bales in 2009-10.
Free exports will benefit Pakistan, the fourth largest cotton producing country in the world, which lost a large crop that fuels its export earning of textile industry. India estimates that Pakistan will import about three million bales or more of cotton after floods, from average imports of 1.5 to 2 million bales. Pakistan's textile sector would have to bear a burden of around $900 million for import of cotton to fulfil its immediate requirements.
China is the major buyer of Indian cotton. India is the second biggest producer, consumer and exporter of cotton and about 60 percent of the current season shipments are sent to China, the biggest consumer. India's export in 2009-10 is estimated at 8.3 million bales.
In Pakistan, as there is no bar on exports, farmers and traders are selling their produce in the international market to fetch better prices. So far about 800,000 bales have been sold from the 2009-10 crops. While about one million bales from the new crop has arrived in the market till Sept 1, which is 300,000 bales less from the previous year.
On one hand cotton crops are damaged and on the other textile industry is facing shortage of cotton yarn in the domestic market due to unchecked export of yarn during 2009-2010. Due to poor cotton crop across the world especially in China, the world demand for the cotton yarn rose and its exports have seen an unprecedented increase. During July to March 2009-10, total yarn export was 500.13 million kilogrammes that was 31.75 percent higher than the quantity exported during the last year. Availability of cotton yarn in the local markets has reduced significantly creating problems for the textile sector.
The textile sector of the country has to bear a burden of $1010 million as import cost of cotton as the total requirement of mills and spinning sector for 2010-11 is estimated to be around 15 million bales. The private sector had estimated production of lint at about 14 million bales but the actual production may be 11.5 to 12.5 million bales. The textile sector has already negotiated import of 1.2 million bales from India and Brazil to fill the gap of demand and supply. The cost of production of textile items is increasing due to several factors like increase in cotton prices, increase in utility bills and now the dollar-rupee parity would further increase the cost of products and made these items more uncompetitive. As a result of it, the input cost of manufacturing cotton material would go up to nearly 10 percent.
The expected lower production and a sharp drop in stocks for the 2009-2010 seasons has already increased cotton prices and would further rise in view of escalating prices of cotton in the international markets, which textile sector would have to bear. Lint price in the international market was 85 cents per pound on August 23, 2010 with an increase of 6 cents per pound.
To coup with the shortage of cotton the government allowed Monsanto, American entrepreneur, to take measures to supply the seeds of its Bt cotton so that it could replace indigenous cotton varieties for enhanced yield.
In Sindh, 90 percent of the total cotton grown is of Bt variety, which is 50 percent in Punjab. The government is trying to increase the cotton production by increasing the yield.
The year 2010 may be the milestone in the history of cotton cultivation in Pakistan, as about 11 new local breeds have been developed, which are pest resistant, out of which eight varieties of BT cotton received the approval of Punjab Seed Council. Similarly, genetically modified breeds are projected as cost efficient, but it decreases not eliminate the use of pesticides and insecticides.
In India, local seeds cost Rs 325 per hectare and the pesticides used in the process cost not more than Rs 400 per hectare. However, the international variety costs Rs 1,450 per hectare compared with Rs 725 per hectare of local varieties.
In coming years perhaps this variety may compensate the losses of floods borne by the cotton growers. It would also help to avoid cotton crisis in future.