By a sil­ver thread

The Pak Banker - - Front Page - Sakib Sherani

AT this time of the year, Pak­istan’s ru­ral heart­land be­gins to throb with fre­netic ac­tiv­ity. The har­vest­ing of each ma­jor crop — es­pe­cially cot­ton, wheat, and su­gar­cane — brings to life the en­tire coun­try­side.

Over­loaded trac­tor trol­leys and trucks, choked ru­ral roads, over­worked farm work­ers, packed diesel pumps and weigh­ing sta­tions, crowded mar­ket towns, and chug­ging fac­to­ries — the en­tire land­scape is abuzz 24/7.

Of all the ma­jor crops, for me there is none quite like cot­ton. Ap­pro­pri­ately dubbed the sil­ver fi­bre, it quite lit­er­ally holds Pak­istan’s econ­omy to­gether. While on its own, it ac­counts for roughly two per cent of GDP, sec­ond only to wheat among the ma­jor crops, its im­por­tance can be gauged by map­ping its link­ages with the rest of the eco­nomic sec­tors.

Tex­tiles, fer­tiliser, pes­ti­cides, chem­i­cals, pack­ag­ing, print­ing, freight and trans­port are all, in one way or the other, con- nected to cot­ton. On the ‘out­put’ side, farmer in­comes de­rived from cot­ton drive the sales of cars, mo­tor­cy­cles, trac­tors, mo­biles, ce­ment, paints and fast-mov­ing con­sumer goods, among other in­dus­tries.

In fact, a sim­ple re­gres­sion of cot­ton out­put and real GDP growth shows that nearly half of the growth in Pak­istan’s econ­omy in any one year can be ex­plained by the size of this sin­gle crop — prompt­ing the la­bel of a ‘mono-crop’ econ­omy in the past. It also gave birth to the fa­mous ‘rule of thumb’ es­ti­mate in the 1990s (by then deputy chair­man Plan­ning Com­mis­sion Qazi Alimul­lah, if I re­mem­ber cor­rectly) that each in­cre­men­tal one mil­lion bales of cot­ton would jack up GDP growth for the year by 0.5 per cent.

Cot­ton is grown on ap­prox­i­mately three mil­lion hectares, or 7,413,161 acres, (Pak­istan be­ing the fourth largest pro­ducer). Ap­prox­i­mately 1.6 mil­lion farm­ers grow the crop in Pak­istan. There are 1,221 gin­ning fac­to­ries, 442 textile spin­ning units, and an es­ti­mated 1,184 units en­gaged in weav­ing, fin­ish­ing and dye­ing fab­ric.

All in all, the cot­ton-sup­ported textile in­dus­try of the coun­try ac­counts for a sig­nif­i­cant share of em­ploy­ment. Value ad­di­tion from cot­ton amounted to ap­prox­i­mately Rs365 bil­lion at mar­ket prices in 2011-12, which was ap­prox­i­mately 25 per cent of the to­tal from all crops grown in the coun­try.

If tex­tiles is the back­bone of Pak­istan’s econ­omy, and cot­ton the back­bone of tex­tiles, the nerve cen­tre of the cot­ton-grow­ing sec­tor has to be none other than the ex­tra­or­di­nary fe­male cot­ton-picker, called ‘chunni’ in the ver­nac­u­lar. At the time of sow­ing, she is in the fields dur­ing the sear­ing heat of May. At the time of har­vest, she is again dili­gently go­ing from bush to bush, of­ten with a lit­tle kid or two in tow, pluck­ing the fi­bre for a pit­tance. The chunni rep­re­sents the un­ac­knowl­edged, but very vis­i­ble, con­tri­bu­tion of women to Pak­istan’s eco­nomic well-be­ing.

De­spite its cen­tral im­por­tance to the econ­omy, Pak­istan’s cot­ton yield is not very high. Ap­prox­i­mately 340kg of cot­ton is pro­duced for ev­ery acre sown, which is sig­nif­i­cantly lower than in China and In­dia. In the case of In­dia, the in­tro­duc­tion of Bt cot­ton sev­eral years ago has led to an ex­po­nen­tial growth in the cot­ton yield and out­put.

At­tempts have been made by Pak­istani of­fi­cials for the past sev­eral years to fi­nalise an agree­ment with Mon­santo to in­tro­duce Bt cot­ton. In the in­terim, many parts of the coun­try, es­pe­cially in Sindh have be­gun to use Bt cot­ton seeds smug­gled from In­dia.

In­ter­est­ingly, the down­sides of Bt cot­ton have ‘al­legedly’ come to light in In­dia. Ac­cord­ing to some In­di­ans I have spo­ken to, In­dian farm­ers are hav­ing to cope with the greater wa­ter-in­ten­sity of Bt cot­ton. If true, this could have im­por­tant ram­i­fi­ca­tions for Pak­istani farm­ers, who are al­ready fac­ing the ef­fects of an in­ten­si­fy­ing wa­ter short­age. Even the fi­nal, mone­tary ‘yield’ from the crop is low. Ac­cord­ing to a Min­istry of Tex­tiles es­ti­mate made a few years ago, for each one mil­lion bales of cot­ton grown, China earns up to four times in ex­port re­ceipts what Pak­istan man­ages. In­dia man­ages to earn twice as much as Pak­istan on this score.

This high­lights the fact that Pak­istan has failed to ex­tract the same ex­port earn­ings as its neigh­bours from cot­ton, due to its op­er­a­tion in the low-end of the value-ad­di­tion spec­trum. How­ever, over­all, textile ex­ports have per­formed strongly over the past few years, ris­ing to $12.4bn in 2011-12, with sig­nif­i­cant in­creases in gar­ments, knitwear, bed­wear and home tex­tiles.

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