Pakistan has become the biggest purchaser of American cotton globally, as record imports from the US keep on developing.
As per the Director of the Pakistan Cotton Ginners Forum (PCGF), Ehsan-ul-Haq, Pakistan has signed agreements for 72,000 cotton bales from the US in the previous week. A report by the US Department of Agriculture suggests that a total of 1.192 million bales have been shipped to Pakistan, the highest in the world.
Ehsan-ul-Haq stated that this year, Pakistan has gotten contracts for more than 3 million bales of US cotton, denoting a prominent surge in imports.Â
He attributed the increment to lower domestic cotton creation and limited availability of high-quality cotton inside the country. Also, the cost of cotton has risen by Rs 200, presently arriving at Rs 18,200 per 40 kg, he added.Â
Pakistani material mills are expected to import up to 5.5 million bundles to meet their requirements this year. Cotton Ginners Forum Chairman Ihsanul Haq accepts that an 18 percent deal charge on the local white build-up has urged millers to import tax-free build-up to meet their prerequisites.Â
Read more: Pakistan’s cotton yarn exports to China cross $100 million
He says that other than cotton, yarn imports have also been excluded from sales tax, causing great concern among the domestic cotton area because the measure is keeping the costs of the local crop depressed to the disadvantages of the cotton cultivators.Â
He asserts that Indian yarn is also advancing into the local market through Dubai.Â
Against Pakistan’s import of over 1.19 m bales, Vietnam has up until this point purchased 0.96 m bales, Turkey 0.67 m parcels, Switzerland 0.65 m parcels, Mexico 0.59 m bunches, China 0.52 m bundles, and India just 0.258 m bunches from US cotton.
Benefits for PakistanÂ
The purchase of U.S. cotton has various advantages for Pakistan’s economy:
1. Improved Quality of Textile Products
U.S. cotton is known for its prevalent quality, which assists Pakistani textile manufacturers with delivering better-finished products. This, in turn, improves Pakistan’s export competitiveness, particularly in business sectors like the European Union and the US.
2. Stable Supply ChainÂ
With expanding volatility in the global cotton supply because of climate change and geopolitical tensions, obtaining from the U.S. gives Pakistani makers a more steady and solid cotton supply, ensuring continuity in production.Â
3. Influence on the U.S. Cotton IndustryÂ
The rise of Pakistan as a significant purchaser has given a significant boost to the U.S. cotton industry, particularly amid declining deals with China. This shift helps U.S. cotton farmers keep up with requests, even as global trade dynamics evolve. The U.S. Department of Agriculture (USDA) has noticed that Pakistan’s developing textile sector has been a key driver of expanded exports to the country.Â
Challenges and Future OutlookÂ
While the latest thing about Pakistan being the top purchaser of U.S. cotton is promising, there are challenges on the horizon:Â
1. Economic Instability in Pakistan
Pakistan’s economy has faced issues like inflation, currency devaluation, and political instability. These variables could influence the country’s ability to keep buying huge amounts of US cotton in the future.
2. Rising Cotton Costs
Global cotton costs have been fluctuating because of supply chain disruptions, environmental change, and other macroeconomic variables. Higher costs could strain Pakistan’s textile industry, which works on tight margins.
3. Sustainability Concerns
As the world’s movements towards sustainable and environmental-friendly practices, the textile industry, including Pakistan’s, faces pressure to lessen its carbon footprint. The business might have to explore sustainable cotton obtaining and adopt eco-friendly creation methods to meet international standards.