KARACHI: The State Bank of Pakistan (SBP) said that latest estimates for cotton crop reveal a worrying picture, as the total production in FY19 is estimated at 10.8 million bales, a decrease of 9.2 percent over the last year’s production level, and trailing 24.3 percent behind the targeted level of 14.4 million bales for the year.
This below-expectation performance of the cotton crop was largely due to a contraction in the cultivated area, the central bank said in its first quarterly report on State of Economy of Pakistan, released a day earlier.
The SBP said that the cotton cultivated area was the lowest in the last seven years; this was mainly due to a lower than average availability of canal water and poor quality of the groundwater.
“Estimates of lower production in the country and rising international cotton prices have put upward pressure on prices of seed cotton in the domestic market.”
Given the stability in the cotton prices, farmers are expected to improve their agronomic practices (pesticides application and soil management) which might enhance cotton production and yield in the coming seasons.
Given the average mills’ annual consumption of around 14 million bales in the country, the production is expected to remain short by around 23 percent for the ginners as per their installed capacity for value addition.
It is important to note here that raw cotton imports for the first quarter of the current fiscal year already stand at 218 thousand bales compared to imports of 113 thousand bales in the same quarter of the last fiscal year, and it is likely that this trend would continue going forward.
Preliminary estimates for the major kharif crops, namely cotton, rice, sugarcane and maize, reveal a subdued performance of the sector.
“This is largely explained by a considerable decline in the area under cultivation, especially in Sindh where water shortages resulted in a drought-like situation. The total area sown under kharif crops for FY19 stood at 7.54 million hectares, a decline of 7.7 percent over FY18.”
Moreover, water shortages and lower fertilizer application might also have an adverse impact on crop yields.
Thus, in overall terms, the contribution of kharif crops in the gross value addition (GVA) of the agriculture sector might fall significantly below the FY18 level.