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The cotton crisis destroys jobs tied to Pakistan’s largest cash crop

(Bloomberg)-Pakistan, one of the world’s largest producers of cotton, is finding it increasingly difficult to meet its needs. This issue could push up import bills and further hurt fragile economies. Margins on other crops are hurting the quality and quantity of harvests. And the scale of the damage is accelerating, with production falling to its lowest level in about 30 years this year, resulting in billions of dollars to import record quantities of cotton to supply the textile industry. Are spending. Something it can’t afford to do. The current account, which recorded a rare surplus between July and December, has recently returned to the deficit amid rising imports. The move could also push up cotton prices, which have already hit a seven-year high. Cotton is one of Pakistan’s most important cash crops and is called “white gold” by 1.5 million farmers. life. It provides employment for 40% of the workforce and serves as a raw material for the textile industry, which generates more than half of foreign exchange revenue. Low cotton production has forced more than 60% of beginners to shut down their factories completely over the past three years. Hundreds of thousands of farmers and textile workers are absent from work, according to Jas Maru, chairman of the Pakistan Cotton Guiners Association, a group representing about 1,300 factories. Maru, who is also CEO of Sindh Gro Industries and runs Pakistan’s largest cotton plant in Hyderabad, does not believe the government is taking serious steps to restore production. ” It was. He runs seven factories and other factories with 50% capacity due to lack of cotton. The number of cotton gin workers at the company plummeted from 400 about five years ago to 100. Pakistan’s cotton gin production is projected to drop to less than 6 million veils in 2020-21, the lowest since at least 1992. Karachi Cotton Gin Forum. At its peak, production in 2004-05 exceeded 14 million veils. The government has set a target of 10.5 million veils in 2022. This is not comforting, as the guidance for the previous year was at the same level and production was well below estimates. .. Pakistan’s fiscal year is from July to June, and the textile industry is booming. With the relief of coronavirus cases in June and the resumption of economic activity, manufacturers are on track to reach full capacity and expand exports. Import surge This is due to a labor shortage in the textile industry earlier this month. According to official data, cotton imports surged to make up for production shortages, nearly doubling to 3.68 million veils in the nine months to March. During this time, textile exports increased from $ 940 million to about $ 11 billion. However, the amount was largely offset by a $ 870 million increase in textile imports, which consisted primarily of raw materials, over the same period. The country pays a lot for cotton abroad and needs to import another 3-4 million veils. In June, Kakan Najib, a former adviser to Pakistan’s Treasury, said higher purchases could further boost global cotton prices and widen Pakistan’s trade deficit. A weak rupee raises the price of domestic necessities as the country’s balance of payments deteriorates. Diplomatic tensions Long-term tensions with Pakistan’s neighbor India can put pressure on cotton shortages. Last month, the government initially approved the import of cotton yarn from India and lifted the ban for almost two years, but the Khan Cabinet subsequently rejected the proposal in a dramatic U-turn, resolving some political issues. He said he could not resume trade until it was done. Pakistan’s Food Safety Minister Fahar Imam said the government plans to provide cotton and pesticide subsidies to revive production and announces for the first time the lowest prices to support farmers. He said he could. “Pakistan is facing a growing crisis in cotton production. We need to prevent farmers from migrating from cotton to other crops,” he said. So far, this measure does not appear to ease farmers’ concerns. After being disappointed in the past, Noor Muhammad, 56, decided to sprinkle cotton on seven acres of land managed by Matthiari this year. Muhammad said sweat drips from his forehead as he carries a bunch of wheat, another major Pakistani crop, to a threshing machine. Visit bloomberg.com for articles like this. Get ahead of the most trusted business news sources. © 2021 Bloomberg LP