Soaring cotton prices fuel textile bonanza

LAHORE – The prices of garments have doubled in the last year on the back of soaring cotton prices giving an edge to national exports, the stakeholders of textile and agriculture sector told Pakistan Today on Wednesday. The price of cotton in the course of a single year doubled and resulted in an increase of production costs for all types of garments including denim, shirts, socks and other items. The price of cotton stood at Rs 12,620 per 37.32 kg with one kg cotton costing around Rs 338.15. According to Karachi Cotton Association (KCA), the price of cotton in March 2010 remained Rs 5,540 per 37.32 Kg while the average price in 2010 remained Rs 4,692 per 37.32 kg.
Thus there has been increase of around Rs 7,800 or the prices of cotton more than doubled. Cotton is the basic raw material of garment industry and now production cost of garment industry has increased and it resulted in high garment prices, said a textile mill plant head Imran Khan adding his mill used to produce denim (jeans) for export purpose. “The jeans we used to produce for Rs 300 per piece now costs Rs 800-900,” he said, adding that the international buyers are very much aware of the production costs and raise no objection to a price increase. “The price of cotton increased world wide therefore the cost of producing denim and other garments skyrocketed. Our international buyers are very much aware of this fact therefore they never objected to an increase in denim prices,” Khan stated, adding that volume of exports remained stagnant but an increase in prices provided an opportunity to the country to earn maximum foreign exchange.
“If we look at the volume of exports, then it is easy to observe that there is no significant improvement in volume but even then we touched $14 billion mark and it is all due to high prices of garments in international market,” he added. Another manager of garment factory said the cost of producing cotton shirts have doubled. He said a cotton shirt which cost around Rs 200-300 now produced for Rs 550-600. The All Pakistan Textile Mills Association (APTMA) spokesman indicated that the cotton prices have seen sharp increase all over the world. He said the exports of country increased because of sharp increase in garments’ prices. Agri Forum Chairman Ibrahim Mughal pointed out that cotton prices increased in the whole world due to lower production levels in cotton producing countries.
He stressed that in all major cotton producers, including India, Australia, China, output fell by 50 percent and prices which were roaming at $0.7 per kg jumped to $1.7 per kg. He noted that cotton demand in the world increased and was a factor which also pushed prices. It was pointed out that the next crop of cotton would arrive in the world market from June and it is expected it will be good crop. “As far as Pakistani output is concerned in the next crop then it will not be good one, as the federal and provincial governments failed to encourage growers for producing an improved cotton crop,” he said. He also criticised the policies of the Punjab government. He noted that management and planning of the Punjab government remained poor and was discouraging farmers. He claimed that official figures involved in agriculture have no vision for increasing cotton production and it is wreaking havoc for the country. “If we look at the cotton production over the year in Pakistan, then it is very disappointing that our cotton production decreased drastically,” Mughal stressed
He also lashed out at the government for failing to achieve cotton sowing area, as target was to sow eight million acres but only seven million acres could come under cotton sowing. He said some five years ago, Pakistan used to produce 14.7 million bales of 176 kg of cotton but the figure has now reduced to 11 million bales. “In reality, our cotton production has continued to fall, despite such attractive prices,” he added.