The Pak Banker

By a silver thread

- 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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