Research Article

Future of Cotton Sector in Pakistan: A 2025 Outlook

Saleem Ashraf1*, Ashiq Hussain Sangi1, Zakaria Yousaf Hassan3 and Muhammad Luqman2

1In-Service Agricultural Training Institute, Rahim Yar Khan, Pakistan; 2University college of Agriculture, University of Sargodha, Pakistan; 3Directorate of Agricultural Extension and Adaptive Research, Lahore, Pakistan.

Received | August 02, 2017; Accepted | May 20, 2018; Published | June 13, 2018

*Correspondence | Saleem Ashraf, In-Service Agricultural Training Institute, Rahim Yar Khan, Pakistan; Email: saleem1828@gmail.com

Citation | Ashraf, S., A.H. Sangi, Z.Y.Hassan and M. Luqman. 2018. Future of cotton sector in Pakistan: A 2025 Outlook. Pakistan Journal of Agricultural Research, 31(2): 145-150.

DOI | http://dx.doi.org/10.17582/journal.pjar/2018/31.2.145.150

Keywords | Cotton, Forecasting, Compound growth

Introduction

In Pakistan, agriculture sector is the significant constituent of economy with approximate share of 19% in Gross Domestic Product (GoP, 2017). However, performance of agriculture sector is poor as compared to potential subject to various impediments. Conversely, share of agriculture sector in GDP is downsizing with the passage of time. Cotton is widely preferred cash crop and being source of raw material for textile industry, importance is always on rise. Cotton accounts for 5.2% of value added in agriculture and 1% of Gross Domestic Product GoP (2017).

Cotton is practiced across the Punjab and Sindh provinces of Pakistan, but the Punjab province is leading in terms of cultivated area and production. About 80% production comes from Punjab while 18% from Sindh province (Ali et al., 2013). Productivity in both provinces is below than potential despite of favorable soil characteristics and viable environmental conditions. Canal irrigation system persists across both provinces to fulfill irrigation demand while other sources like tube well are additional sources to combat irrigation needs.

Cotton facilitates textile sector tremendously which is one of the major supporter of national economy. Pakistan stands 4th in cotton production while 3rd largest consumer of the world. During 2016-17, Pakistan significantly missed the target of 10.671 million bales of cotton (GOP, 2017). This restricted production was pertinent to pest infestations, sluggish marketing system and significant reduction in sowing area. Watoo and Mugera (2014) unveiled that tube well owners and water buyers can increase their cotton production by 19 and 28% respectively but use of improved quality seed, poor consultation with extension field staff and poor availability of irrigation water are major obstacles. Availability of quality seed, fertilizer and irrigation are scarce commodities for farmers affecting production significantly (Chaudhry et al., 2009). Production of cotton in Pakistan is dependent upon price of competing crops, prices of fertilizers and area under cultivation. Unfortunately, marketing in Pakistan is crashed (Carlos et al., 2002). Effective marketing could foster cotton production on farm level and ensure quality. In addition, more education, finance and improved transport facilities may enhance participation of growers in markets (Ali et al., 2017). Education to growers, plant protection practices, fertilizers and inputs availability had contributed towards increased production of cotton (Nadeem et al., 2013).

Number of research studies have forecasted production of different crops in Pakistan. Muhammad (1992) forecasted rice production, forecasted wheat area and production, forecasted wheat production, forecasted wheat supply and demand, forecasted production of mangoes, forecasted behavior of food crops in SAARC nations, forecasted production of wheat, rice and maize area and production Ahmad et al. (2017), forecasted area and production of major crops in Pakistan. Forecasting of cotton crop in Pakistan is scanty except of Ali et al. (2015) where forecasting was conducted in comparison of sugarcane crop. Hence this forecasting was planned to forecast specifically the area and production of cotton across Punjab province.

This study entailed overtime analysis of the cotton area, production and yield in the Punjab and Pakistan. The study further emphasized on forecasting cotton area and yield to visualize future trends in the Punjab and Pakistan. Production forecasting is an important input to decision making and scheduling production more effectively, so it was assumed that this forecasting will be helpful in planning cotton production policy for coming years.

Materials and Methods

Punjab is the leading cotton produced of the country, therefore study was mainly focused in the Punjab province and Pakistan. Study was based on secondary data of cotton crop and data regarding area, production and yield of cotton in Punjab Province and entire Pakistan were taken from various issue of Economic Survey of Pakistan and Agricultural Statistics of Pakistan. Study analyzed data from 1990 to 2017 (Table 2). Compound growth rate was calculated through the formula Yt = Y0(1+r)t, while, forecasting of cotton has been estimated basing on the calculated compound growth.

Compound growth rate

To calculate the compound growth rate 2016 was set as base year while following formula was applied. Similar formula has also been applied by the Ali et al. (2017).

Yt = Y0(1+r)t

Where;

Yt: Area/ production/ Yield in year t; Y0: base year of Area, Production and yield; r: Compound Growth Rate

Compound Growth Rate = (last year/first year)^(1/No of Years)- 1

Forecasting

On the basis of compound growth rate the productivity of next 12 years was forecasted by keeping 2013 as base year. Various issues, problems and factors affecting the productivity were kept constant such as climatic variability, unapproved varieties, non-adoption of improved practices, market fluctuations, production risks and adulterated inputs. Used equation is following:

Yt+1 = Yt + (Yt*r)/100

Yt: Base Year (i.e. 2013); r: Calculated compound growth year.

Results and Discussion

The calculated compound growth rates a depicted in Table 1, infer that area under cotton exhibited negative growth in Pakistan while production and average yield reflected positive growth. The negative behavior of area under cotton is pertinent to shifting of cotton growers toward cultivation of sugarcane. Growers assumed better returns from cultivation of sugarcane because of policy incentives undertaken by government (Khan, 2017). Similarly, role of subsidies offered by the government is prominent in increasing per acre production of major crops including cotton. Therefore, average yield showed positive growth in the Punjab province as well. However, area under cotton and production showed negative growth. This negative production in Punjab was mainly due to abrupt climatic variations as well.

Table 1: Compound growth rate of Pakistan and the Punjab province.

Table 2: Distribution of area, production and yield of cotton in Punjab and Pakistan.

Cotton is cash crop equally important for the national economy as well as livelihoods of cotton growers. Area, production and average yield of cotton in Pakistan is facing several challenges. In results area of cultivation is shrinking, production is slack and average yield is likely to go down. Overall production of cotton is lower than potential (Rehman et al., 2016) . Among competitive nations production of cotton is upward. OECD/FAO (2013) reported 1.7% annual growth of cotton production by 2022. Pakistan is truly a land of cotton, but level of production is lower as compared to neighboring countries followed by poor quality produce (GoP), (1). Cotton across Pakistan is surrounded with number of challenges and risks (Ashraf et al., 2013). Prominent example of risks is prevalence of flood in 2010 claiming immense loss to standing cotton and casing substantial loss to economy and livelihoods (Ashraf et al., 2013).

Table 4: Forecasted production of cotton in the Punjab Province.

Higher cost of production was reported major barrier in cotton production (Bakhsh et al., 2005). Ali et al. (2015) unveiled 97% variation in cotton production pertinent to higher cost. Bakhsh et al. (2005) reported higher returns and high production due to cost of plant protection measures. Average income was greater than average cost among cotton growers, hence cultivating cotton and investing cost was profitable (Saleem and Jami, 2013). Contrary, Ahmad (2000) argued bad performance of cotton pertinent to high fixed costs among small farmers in particular. 

The cotton production process entails numerous inputs starting from land preparation to marketing. Entire process is cost intensive and overtime this production cost has increased. This extensive cost has resulted in negative growth of cotton (Ali et al., 2012). Production of cotton in Pakistan depends upon pricing of cotton, input prices, climatic conditions and most of these are erratic in Pakistan (Carlos et al., 2002). Nadeem et al. (2014) argued inadequate literacy, inadequate adoption of protection measures, fertilizers, land preparation issues affected cotton productivity. Fertilizers, water and certified seeds were reported as scarce elements for farmers by Chaudhary and Khan (2009) depicting them as factor affecting productivity of cotton. In addition, Pakistani cotton growers are experiencing rising cost of production while less output and return Bakhsh (2009). Cost of inputs negatively affects the production of cotton (Ahmad, 2017).

In addition to cost of production, high temperature and water shortage are prominent factors affecting cotton production (Malik and Ahsan, 2016). Cotton crop in Pakistan is vulnerable to climate change (ADB, 2009). Raees and Collins (2004) argued that cultivation of cotton is reliant on irrigation through Indus River and fast melting of icecaps on Himalyas followed by decrease in snowfall are putting pressure on irrigation requirement. If this water shortfall persists, farmers shall shift to other crops which are less water consuming (Pakistan, 2003). Now Government is urge farmers to shift toward less water consuming crops to amid water scarcity (Anonymous, 2017). Moreover, efforts are directed to adopt micro irrigation techniques and updated irrigation system to conserve water. Kamal (2009) stated that Pakistan didn’t transformed irrigation system, neither generated storage capacities, farmers’ ability to market their produce is scanty, agro-based industries are weak and subsidies are benefiting the landlords more. Hence, farmers have no choice of leaving farming of switching their cropping patterns. High temperature, heat stress, less availability of water and less mechanized farming are further obstacles to cotton production in future (Raza, 2009; Malik and Ahsan, 2016).

Summarizing the discussion principal factors limiting cotton production in Pakistan are cotton leaf curl virus disease (CLCuV), heat stress, limited water availability, the high price of inputs (fertilizer, seed, pesticide, insecticide, etc.), the relatively higher intensity of insect pest attacks, shortage of good quality seed, seed adulteration, cotton marketing issues and the crop insurance system. In previous fiscal year 2015-16, about 28% decline in cotton production has been documented pertinent to climate change, competition with relevant crops, poor marketing prices and infestation of pink bollworm (Ahmad, 2016). Subject to various constraints country is not able to keep pace in cotton production (Ali, 2005). Managerial and policy based proficiency on country level and farm level is imperative to boost cotton yield (Ahmad and Qureshi, 2009).

Conclusions

Study concluded that compound growth of cotton indicated negative growth in area in Pakistan and the Punjab province. While, production of cotton is expected to face decline in coming years. Forecasting of cotton production exhibited positive growth and rise in area, production and yield of cotton in Pakistan. However, in the Punjab, area and production appeared inverse as area is expected to rise while production and average yield will face decline in future. This decline in Punjab province could be major blow to economy and livelihoods of the cotton growers. Cotton is cash crop and it is imperative to boost production to meet domestic requirements and earn foreign exchange. Study urge government to underpin cotton policy and take initiatives of subsidized inputs and water conservation for sustained utilization of water. Additionally, there is need of strong marketing, capacity building of farmers and strengthened role of extension service providers.

Author’s Contribution

Mr. saleem Ashraf Conceived the Idea and write up of paper; Mr. Ashiq Hussain Sangi Conducted Analytical activities on data; Dr. Zakaria Yousaf Hassan Conducted Research, helped in collection and verification of data; Dr. Muhammad Luqman Supervised the work, prepared methodology and critically reviewed the paper.

References

ADB. 2009. Building climate resilience in the agriculture sector in Asia and in the Pacific. Asian Dev. Bank, Annu. Dev. Rep. pp. 9.

Ahmad, B. Economics of various enterprises on small farms. M. Phil Thesis, Faculty of Agricultural Economics and Rural Sociology, Univ. Agric. Faisalabad, Pak.

Ahmad, M. and S.K. Qureshi. Recent evidence on farm size and land productivity: Implications for public policy. Pak. Dev. Rev. 2009: 38: 1135-1153.

Ahmad, D. 2017. Analysis of economic implications for cotton production in Southern Punjab of Pakistan. Transylvanian Rev. 2017: 1(6).

Ahmad, S. 2016. The future of cotton, available at https://www.dawn.com/news/1294643

Ahsan, R., Z. Altaf. Development, adoption and performance of Bt. Cotton in Pakistan: Rev. Pak. J. Agric. Res. 2009: 22: 73–85.

Ali, S. Total factor productivity growth and agricultural research and extension: An analysis of Pakistan’s Agriculture, 1960-1996. Pak. Dev. Rev. 2005: 44: 729-746.

Ali, A., A. Abdulai and D.B. Rahut, Farmers’ access to markets: The Case of cotton in Pakistan. Asian Econ. J. 2017: 31(2): 211-232. https://doi.org/10.1111/asej.12116

Ali, H., M. Aslam and H. Ali. Economic analysis of input trend in cotton production process in Pakistan. Asian Econ. Financ. Rev. 2012: 2(4): 553.

Ali, H., I.S. Chaudhary and H. Ali. Production cost of major crops in district Bahawalpur (Pakistan): An Economic Analysis. Pak. J. Life Soc. Sci. 2015: 13(2): 68-72.

Ali, H., H. Ali, Z. Faridi and H. Ali. Production and forecasting trends of cotton in Pakistan: An analytical view, J. Basic. Appl. Sci. Res. 2013: 3(12): 97-101

Anonymous. 2017. Fighting water scarcity: Experts urge farmers to grow less water-intensive crops, available at https://tribune.com.pk/story/1388434/fighting-water-scarcity-experts-urge-farmers-grow-less-water-intensive-crops/

Ashraf, S., M. Iftikhar, B. Shahbaz, M. Luqman and G.A. Khan. 2013. Linking Agricultural risks and their management with cotton value chain. Abstract presented in 16th Sustainable Development Conference organized by Sustainable Development Policy Institute, Islamabad, 10-12 December. Online available https://www.sdpi.org/sdc/paper_details.php?event_id=325&paper_id=456

Ashraf, S., M. Iftikhar and G. A.Khan. Decisive analysis of risks in agriculture: implications for agricultural extension for sustainable management. Span. J. Rural Dev. 2013: 4(3): 41-52

Bakhsh, K. 2009. Economics of adopting BT Cotton: Evidence from Pakistani Punjab. South Asian Netw. Dev. Environ. Econ. (SANDEE), PO BOX 8975, EPC 1056 Kathmandu, Nepal, SANDEE Working Paper .

Baksh, K., I. Hassan and A. Maqbool. Factors affecting cotton yield: a case study of Sargodha (Pakistan)” J. Agric. Soc. Sci. 2005 (01) 4: 332-334.

Carlos, E.C., Octario and A. Ramirez. 2002. Forecasting foreign cotton production. The Case of India, Pakistan and Australia. Department of agriculture and applied economics, Tex. Tech. Univ. Lubbock, Tex.

Chaudhry, I.S. and M. B. Khan. Factors affecting cotton production in Pakistan: Empirical evidence from Multan District. J. Qual. Tech. Manage. 2009: 5(I1): 91-100

Govt. of Pakistan, 2017. Economic Survey of Pakistan, Federal Bureau of Statistics, Islamabad, Pakistan.

Kamal, S.S. 2009. Use of Water for Agriculture in Pakistan: Experiences and Challenges, Off. Res. Econ. Dev. Publ. 12. http://digitalcommons.unl.edu/researchecondev/12

Khan, M.Z. 2017. Cotton production to fall further, warns ministry. Online available at https://www.dawn.com/news/1311726

Malik, T.H. and M.Z. Ahsan. Review of the cotton market in Pakistan and its future prospects. OCL 2016: 23(6): A606. https://doi.org/10.1051/ocl/2016043

Nadeem, A.H., M. Nazim, M. Hashim and M.K. Javed. Factors which affect the sustainable production of cotton in Pakistan: A detailed case study from Bahawalpur District. Proc. Seventh Int. Conf. Manage. Sci. Eng. Manage. Lect. Notes Electr. Eng. 2014: 241:745-753. https://doi.org/10.1007/978-3-642-40078-0_64

Organization of Economic Cooperation and Development (OECD)/FAO, 2013. OECD-FAO Agricultural Outlook 2012-2021; Chapter 10, Cotton. OECD Publishing.

Pakistan. 2003. Pakistan’s Initial National Communication on Climate Change. Minist. Environ. Islamabad, Pak. pp. 92.

Raza, S.H. 2009. Cotton production in Pakistan. A grower’s view. Presentation (ppt.) at the 68th ICAC Plenary Meeting. International Cotton Advisory Committee (ICAC). United States of America.

Rees, G., D.N. Collins. 2004. An assessment of the Potential Impacts of Deglaciation, Snow and Glacier Aspects of water resources management in the Himalayas (SAGAR MATHA). Centre for Ecol. Hydrol. Oxf. UK.

Saleem, M.A. and A.R. Jami. 2013. Farm accounts family budget of rural families and cost of production of major crops in Punjab 2000-2001. Punjab Econ. Res. Inst. Lahore, Pak.

Watto, M.A. and A. Mugera. 2014. Measuring efficiency of cotton cultivation in Pakistan: a restricted production frontier study. J. sci. food agric. 2014: 94(14): 3038-3045. https://doi.org/10.1002/jsfa.6652