BUMPER COTTON CROP
Textile Ministry — is a need of the hour to face the new world order
By AMANULLAH BASHAR
Oct 25 - 31, 2004
While the water consuming crops like rice and sugarcane were hit considerably due to shortage of water mainly because of low amount of rainfall this year, the cotton crop the mainstay of our economy is however expected to break all previous record as size of the crop this year is likely to be in the region of 12 million plus bales. According to crop estimates for the last three year, the size of the crop usually remained around 10 million bales while the situation seems altogether different this year. However, the final assessment has yet to come. According to an assessment the crop may be around 15 million bales which in a way looks exaggerated assessment however, it may easily touch the mark of 12 million sales said a market player. Though the size of the crop matters as far as the textile exports were concerned, however, the more important factor is how much of the produce is being consumed for value addition, is the real factor.
As far as the local textile industry was concerned, it is in a sound state of consuming the available stuff especially in view of the impressive investment in balancing, modernization, replacement as well as expansion of the existing units which are quite capable to produce the desired results.
While looking back at the performance of the textile exports, it was also impressive as it set a milestone in textile exports which was estimated more or less around $10 billion which is certainly an output worth appreciating.
The new year which is not far away to open new challenges for all the active players in the export regime especially in the face of WTO when the quota protection would be done away with after January 2005.
As far as the quality of textile products ranging from yarn-fabric to made ups, was concerned, it was quite capable to weather the storm, the only factor which needs immediate attention of the policy makers is the input cost which might render our textile products uncompetitive in the international scenario especially the China factor which has facilitated its industry with electricity at a nominal prices to the exporters having 60 percent exports of their total products.
Obviously, Pakistan which produces most of its electricity through costly fuel oil cannot afford to offer such a lucrative offer to the power consumers, yet it can at least reduce the government levies on power consumption if we have to enable our economy to withstand the onslaught of the cheaper products within the country and of course in the export scenario.
As far as cotton consumption of our neighboring country was concerned, it is reported that the indian mill use and production hit records. According to newly available USDA data, Indian mill use and production are expected to hit historic highs in 2004/05. Consumption is forecast at 3.0 million metric tons, up 4 percent from the previous year.
Production is forecast at 3.1 million metric tons, up 3 percent from the previous year.
India is already the second largest user of cotton in the world with an average 2.9 million metric tons of mill use per year. Because of its low cost of production and economies of scale, India is expected to expand its apparel and textile industries. Experts believe that India will benefit when the current system of quotas governed by the Multi-Fiber Arrangement (MFA) is terminated. Also concerns about Chinese mill use raised by tighter credit, increasing labor and energy costs, and the threat of US safeguards is making India an attractive alternative. Targeting both domestic and export markets has helped the apparel industry to grow at an annual rate of 15 to 20 percent. India is the third largest cotton producer in the world, with an average 2.6 million metric tons production a year. With the exception of some high-quality ELS, India produces most of the cotton used by its textile industry. Better than average late-season rainfall is likely to result in favorable yields; however, the increase in production from last season is attributable to additional area. Last year's record yields and high cotton prices combined with extended monsoon rains have encouraged Indian cotton farmers to plant more area.
The marketing year 2003/04 final US export sales report shows 13.33 million running bales of cotton exported in 2003/04, up 1.85 million running bales or 17 percent from the 2002/03 total. A dramatic increase in exports to China, up 2.9 million running bales, offset declines in other markets.
Exports to China accounted for more than one-third of the total reported exports. Exports to Mexico, traditionally the largest US market declined 17.5 percent, as China supplanted Mexico as the top US market. Exports to Mexico in 2003/04 suffered due to continued decline in Mexican mill use, higher domestic production, and large carry-in stocks. Exports to Turkey, the third largest US market in both 2003/04 and 2002/03 were down slightly; in line with Turkey's decrease in total imports.
The US maintained the nearly two-thirds market share in the Turkish market it had in the previous two years. The US maintained the roughly 30 percent market shares seen in Indonesia and Thailand in 2003/04. US exports to Korea and Pakistan were up by about 10 percent in each market.
However, US market share in Pakistan declined as Pakistan's total imports more than doubled, while US market share increased in Korea as total imports declined 15 percent.
In order to face the new world in the face of globalization, a full time Ministry of Textile is the need of the hour to give a direction to the textile industry which is our sole export earner.