Pakistan expects record cotton produce in current year

Excerpts from an interview with Pakistan’s Ambassador to China published in China Textile News.

Pakistan’s Ambassador to China, Masood Khan has said that Pakistan is expecting record cotton production of over 15 million bales in the 2011-12 crop year as farmers are sowing in a wider area after domestic prices doubled a year ago.

He said this in an interview with China Textile News, a Chinese language daily which focuses on textile related matters, according to a statement received from Beijing on June 18, 2011.

The Ambassador said Pakistan achieved record cotton production of 14.6 million bales in 2004/05, but the output fell sharply after that until now. This year farmers are growing cotton in non-traditional rain-fed areas. Our government is targeting a sowing area of 8.5 million acres, up 8% from the last year, working out a plan to prevent pest and virus attacks, and ensuring seed availability.

He said textile industry in the most important industry for Pakistan which contributes 8% of its GDP. It is therefore rightly called the backbone of our industry.  On the global scale, Pakistan is the fourth largest producer and third largest consumer of cotton. The textile sector contributes 60% to the total earnings of the country, accounts for 46% of the manufacturing and provides employment to 38% of the manufacturing labour force. Cotton and textile account for about two-thirds of the country’s exports and they provide livelihood to more than 10 million families.

Ambassador Khan said increased cotton production is necessary to achieve 4.2% growth rate target in the next financial year starting in July 2011. Our growth rate slipped to 2.4% last year due to the huge losses suffered by our economy on account of massive floods. Gains in cotton can redeem the economy.

Mentioning the steps taken by the government to increase the yield of cotton, the Ambassador said that President Asif Ali Zardari declared 2011 as “Textile Year” in order to substantially increase cotton cultivation, develop new and high yielding varieties of cotton, and attract robust investment to promote textile industry in the country. “Of course, this declaration shows the importance our government attaches to this vital sector. The President has called for setting up of garment cities in Karachi, Lahore and Faisalabad to give boost to the textile sector. The President has also emphasized transition to higher quantities of valued added textile products to realize full potential of our cotton industry,” he said.

“The good news is that Pakistan’s textile industry had made its mark in the global market in the past six decades; and it has proved its continued strength even in the post-quotas era. Remarkably, it has survived two serious challenges – the international financial crisis and the devastating floods last year,” he said.

The Ambassador emphasized that while these are positive factors, we cannot be complacent. “We need to rejuvenate our textile sector by investing in skills development, training facilities, technological transfers, technological upgrades, and energy. The predominant reliance on the textile industry has to be reduced by development of new, emerging sectors. For the textile sector itself, what we need most are innovation and efficiency, skilled human capacity, sophisticated machines and equipment, research and development, and development of industrial infrastructure through industrial parks and estates,” he added.

He said in order to ensure robust growth of our textile industry, we are paying attention to the development of support industries of machinery, dyes and chemical. We are making progress in the areas of public-private partnership and joint ventures with leading international brands.

Talking about Pakistan-China bilateral trade, Ambassador Masood Khan said it has seen positive trends on all fronts. Last year, for instance, the overall volume rose to US $8.7 billion registering a cumulative year on year growth of 28 %. Pakistan’s exports increased by 37.44%. While these trends are good compared to the past, we want to move forward with speed and efficiency to achieve the overall target of US $ 15 billion in the next three to four years. Secondly, we are taking measures to reduce the trade deficit of $ 5.2 billion in China’s favour. For that purpose, we have invited official Chinese purchase missions to visit Pakistan and place orders for Pakistani products for Chinese market.

In 2009, he said, the global shortage of cotton caused by a shortfall in Chinese crops led to an exponential growth in the external demand for Pakistan cotton yarn. China itself procured huge quantities of yarn from Pakistan. This trend continued in 2010 though at a slightly lower pace. Overall, textile related exports to China are 65% of the total Pakistani exports to China. In 2010, for instance, Pakistan exported cotton yarn, fabrics, cotton, cotton wastes, home textiles, garments, knitted fabrics, and carpets to China in big quantity.

The Ambassador said at the Second Session of Pak-China Free Trade Commission, held in November 2010, the two sides noted that Pakistan’s exports to China predominantly depend on textile and clothing. Conscious of this limitation, our government is trying to diversify our industrial base.

We have sought assistance from China in vocational and technical training in the areas of value added textiles, gems and jewellery, ceramics, surgical instruments, leather and light engineering. China has agreed to consider the proposal.  Training and capacity building in value added textiles will be especially helpful in streamlining and refining our exports to China.

He said agreements have been signed between Pakistani and Chinese institutions for development of hybrid cotton seeds, including of BT cotton, to improve the yield and quality of cotton in Pakistan.

Next year, we are launching the next Five Year (2012-1216) Pak China Development Programme on Trade and Economic Cooperation (FYDP).  This programme includes collaboration on an Institute of Textile and Clothing, the Ambassador said.

He said Pakistan welcomes Chinese producers setting up factories in Pakistan. “Pakistan has one of the most liberal investment regimes. Pakistan’s investment environment is especially hospitable Chinese entrepreneurs. Chinese corporate sector has worked in Pakistan for several decades with success. So most of the Chinese companies are familiar with Pakistan’s manufacturing landscape. China has excess capital and expertise in textiles industry. The textile industries’ competencies can be easily transferred to Pakistan. In fact, the best option would be to start exclusive textile zones which could be managed by the Chinese enterprises. We could also experiment with joint ventures. An interface of sorts already exists,” he said.

Ambassador Masood Khan said Pakistan and China face similar challenges related to higher labour wages and procurement of raw material. “Labour all over the world is demanding higher wages because they expect to have higher living standards. Raw material prices are rising all over the world. So in that sense, China and Pakistan are not exceptions. But I would say that on both counts – labour and raw material – Chinese companies could see a stable development of their textile businesses in Pakistan. Supply of raw material will not be a problem,” he said.

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