SEMINAR
Role of cotton and textiles in
the economy of Pakistan and challenges ahead
Report by
Dr. H.R. Sheikh,
Professor, Textile Institute of Pakistan

Formation of Pakistan Centre for Trade and Industry studies [PCTIS] is an event of historic importance. The need for the establishment of such a centre was felt by the textile trade and industry for a long time!
The President and the Directors of the PCTIS deserve congratulations for taking a lead and for their pioneering efforts.
PCTIS arranged a seminar on the subject of "Role of cotton and textiles in the economy of Pakistan and Challenges Ahead" on the 29th of May, 2004 at the Pakistan Institute of Cotton Research and Technology, Karachi.
The Seminar was attended by a large number of literary personnel associated with textile education and research, technical and managerial personnel associated with textile trade and industry.
The VIP's seated on the stage were:
· Mr. Muhammad Mian Soomro, Chairman, Senate, Chief Guest
· Dr. Mohammad Arshad Malik, President, PCTIS
· Mr. M.R. Khan, Director, PCTIS
· Mr. S.M. A. Rizvi, Chairman, Trading Corporation of Pakistan.
· Mian Waqar Mannoo, Chairman, APTMA
· Mian Iftkhar Afzal, Honrary Executive Secretary, PCTIS
· Mr. Aneesur Rahman, Secretary, PCTIS
· Mr. Ibad Badar Siddiqui, VP, PCCC
The proceedings of the seminar started with the recitation from the holy Quran by Mr. Fahad Altaf. After the recitation from the holy Quran various speakers addressed the gathering as per programme of the seminar. The salient features of the addresses are reported below.
1. Address of welcome by Mian Iftkhar Afzal
We are lucky to have following learned speakers to address the distinguished gathering and benefit us with their views, comments and suggestions relating to the issues confronting the Pakistan textile trade and industry:
The cotton textile industry is the back bone of Pakistan's economy.
Approximately 62% of the total foreign exchange earnings are derived from the export of cotton textile products. Textile industry also provides employment to 38% of the total workforce in the manufacturing sector. Ironically, majority of the cotton growers are poor!
We have been bye-passed by the scientific revolution of the 20th century. Our cotton yield per hectare is low, thus, the income of growers is low and does not alleviate their poverty.
Mr. Iftkhar Afzal quoted verses from the holy Quran which emphasise the importance Islam places on education! We must be leaders in creation of new knowledge and acquire the habit of hard work, like Chinese and Western nations of EU and U.S.A. A person becomes genious on the basis of 99% hard work and 1% intelligence.
During the Mughal rule in India establishment of educational institutions was neglected. During the 17th century University of Harward was established in U.S.A. In contrast Mughal emperor Shah Jahan built Taj Mahal in 1648.
However, since 1947 cotton production in Pakistan has made satisfactory progress. From 1.7 million bales in 1948 cotton production in 2002-2003 stood at 10 million bales for which the credit goes to cotton growers. However, the ginning sector is in urgent need of modernisation and up-gradation of its production facilities.
In this context possibility of collaboration with American ginning machinery manufacturers must be explored.
In 1948, the number of spindles installed in Pakistan were only 75000 but now the installed capacity is about 9.0 million.
In order to face the challenges of WTO, APTMA members have invested to-date about 3.0 billion dollars on modernisation of their respective textile mills. Similarly, the textile made-up sector has made tremendous progress. The textile industry deserves incentives and government support. We need to concentrate on research for improvement of cotton yield and quality.
The priority areas are:
· Education
· Doubling the existing cotton yield
· Discipline and hard work
Mr. Iftkhar Afzal concluded his welcome address with a prayer, "May God grant me knowledge".

2. Key note address by Dr. Malik
Dr. Muhammad Arshad Malik, President, PCTIS, thanked the distinguished speakers viz Mr. Iftkhar Afzal, Mr. S.M.A. Rizvi, Mr. M.R. Khan and Mr. Waqar Monnoo. He also thanked Mr. Muhamad Mian Soomro and Dr. Ibad Badar Siddiqui for their support to PCTIS. The salient features of his address are:
It is a great honour for me to address the distinguished gathering of experts in trade and industry. PCTIS is the first centre is its kind in the private sector. It was created last year. It is non-political, non-profit organisation in its early stages. Its object is to conduct research on issues of importance to the trade and industry and to provide an independent forum for high-lighting problems being faced by the industry.
Thus, the centre will endeavour to serve the cause of trade and industry.
As the centre involves itself in research, it will gradually move on the narrower issues of great importance.
Cotton is the silver fibre of Pakistan. Area under cotton cultivation increased from 1.053 million hectares to 3.141 million hectars and yield from 163 KGMS to 507 KGMS per hectares during the period from 1947/48 to 1996/97. The improvements work out at 198% and 209% respectively. The credit for achieving substantial progress in cotton production goes to the farmer. However, it is necessary for the public sector agencies to solve the Socio-Economic problems of the farmers. The indigenous cotton production meets 90% of the requirements of the industry and exports of cotton textile production account for 65% of the total foreign exchange earnings of Pakistan. The cotton grading system, developed by PCSI, must be implemented so that it is possible for the industry to procure contamination-free cotton and manufacture value-added products.
Authentic statistics about cotton production must be made available so that the trade and industry can plan import/export of cotton. The textile industry must convert major part of yarn and grey cloth into value-added products. In order to survive and compete in the WTO era, the industry should concentrate on the improvements in productivity and product quality. In these endeavours the industry should be provided institutional support. Furthermore, attention must also be focussed on processing of man-made fibres and manufacture of synthetic yarns and fabric for polyester or polyester cotton blends. In this context the PCTIS will welcome the services of experts (retired) in honorary capacity to provide advisory services.

3. Address by S.M.A. Rizvi
Mr. S.M. A. Rizvi Chairman, Trading Corporation of Pakistan, congratulated Dr. M.A. Malik for starting PCTIS and expressed the hope that it will make progress. He discussed the importance of cotton, the cash crop of Pakistan as follows:
There are 1200 ginning factories, 800 oil mills and 450 textile mills in operation in Pakistan Edible oil extracted from cotton seed and sun-flower meet 70% of the domestic requirements. Seed cake is used as cattle feed.
Pakistan is No. 4 cotton producer in the world with production of about 8 million bales ( 480 lbs each). The other three top producers are China 22 million bales, USA 18 million bales and India 13 million bales. Top ten producers contribute production of 77.88 million bales to the world. However, yield per area is very low in Pakistan and India, being only 640 lbs and 397 lbs per Acre respectively. In contrast, yield in Israel is 1939 Lbs per acre.
TCP was revived in October 1999 and allowed to resume operations. On 4th November 1999 it was directed to cease intervention. It was directed to intervene only when cotton prices crash in the local market and purchase cotton in order to stabilise prices and to ensure fair return to cotton growers for their output.
PCSI has developed 6 standard cotton grades. TCP buys Base Grade (staple length 1 1/32 inch). Premium is paid for grades higher than the Base Grade.
Mr. Rizvi gave details of year wise prices of phutti/40 Kg and lint prices per maund. During the crisis period of 1999-2000 TCP purchased 525,000 bales which came down to 109,000 bales next year as the crisis passed. TCP did not intervene during 2002-03 and 2003-2004. No bales were purchased during these years as price support was not required!
TCP is supporting growing of cotton in Balochistan. Cotton varieties recommended for Balochistan are NIAB-78 and CM-109. At present there are only two ginning factories in the private sector in Balochistan.
TCP is associated with the experimental work of producing clean contamination-free cotton which was started on the initiative of APTMA in Rahimnyar Khan. Because of catalytic role of TCP this work has now been extended to five districts of southern Punjab. This is extremely important and useful work and should continue! Because of poor quality ginned contaminated cotton, the prices paid for Pakistani cotton, yarns and fabrics are discounted in the international export market by about 10%, 20%, and 30% respectively. The loss sustained by Pakistan because of contaminated cotton is about a billion dollars annually ! On TCP initiative the standard cotton bale weight has been fixed at 170 KG.
Mr. Rizvi regretted that ICAC has terminated the membership of TCP because of non-payment of fees by GOP. He welcomed the promulgation of Cotton Standardization Ordinance 2002 and emphasised its implementation at the growing, ginning and yarn manufacturing stages. The advantages of clean, contamination-free cotton production are obvious, otherwise problems will be faced. After the commencement of WTO on 1.1.2005 survival of the textile industry will be determinedly its capacity to produce textile products of the required quality at competitive prices.
Concluding his address Mr. Rizvi thanked the Government of President Pervaiz Musharaf for extending support to TCP.
4. Address by Mian Waqar Monnoo
Mr. Monnoo, Chairman, APTMA, briefly reviewed the history of cotton production in Pakistan. The cultivation of American upland staple cottons was introduced by the British in the areas now included in Pakistan. It goes to the credit of cotton breeders and agricultural scientists that Pakistan is ranked as the 4th largest producer of cotton in the world. Mainly medium to medium long staple cotton varieties are grown in Pakistan.
However, the textile industry is facing problems because of poor quality ginned contaminated cottons. In order to encourage production of clean contamination-free cotton the industry is paying a premium of Rs. 75/- to Rs. 100/- maund to ginners. Efforts to produce clean cotton must start at the growing stage.
Awareness campaign must be started so that growers train cotton pickers and contaminations are not picked alongwith cotton. Similarly, the ginners should play their role in producing clean cotton. Mr. Monnoo said that the industry pays premium for grades above the base grade but some of the big banks do not finance on the basis of higher prices paid for such grades. Consequently in buying clean, better grade cotton the textile millowners bear the additional cost upto 35% from their own resources which is a heavy financial burden!
The production of cotton has stagnant at about 10 million bales, which is not sufficient to meet the requirements of the textile industry and the GOP must make efforts to increase cotton production.
The textile industry exports contribute about 9% of GDP and 46% of employment in the manufacturing sector. But textile exports from Pakistan are less than 2% of the total international exports market of about 355 billion US dollars.
Pakistani cottons are not suitable for the production of fine and super-fine categories of yarns. The textile industry has started producing these yarns from American cotton on a large scale for conversion into value-added products. Pakistan today is the second largest importer of long staple American Pima cotton measuring 35 m.m. in staple length, for producing value-added apparel, ready-made garments. Establishment of modern apparel sector is necessary which requires heavy investment and, therefore, APTMA needs government support for this sector.
The analysts consider China, India, and Pakistan as fore-runners and market leaders in WTO era. Pakistan is better placed than India because the machines and equipment in the textile mills is more modern as compared to that in Indian textile mills. The GOP must come forward to assess that facilities required by the exporters for exploring new markets so that textile products fetch better prices than being realised at present.

5. Address by Mr. Mohammed Mian Soomro
The chief guest Mr. Mohammad Mian Soomro expressed the view that PCTIS was first centre of its kind and he congratulated Dr. Malik for arranging an important function. Through this forum dedicated efforts can be made for highlighting the problems of textile trade and industry and suggesting practical solutions. These efforts will prove beneficial to the industry and facilitate better performance by the trade and industry in improving exports of textile products. I shall recommend to the GOP to support activities of PCTIS. Competition in the textile export market will intensify with the commencement of WTO. It is therefore, necessary for the textile industry to modernise and upgrade its production facilities.
Similarly efforts should be made for the improvement of cotton picking and ginning processes by the application of modern techniques. Thus, by monitoring at source cost of removing contaminations from cotton during later process of spinning can be saved. It is also necessary to improve irrigation system and check the curse of water logging.
With God's grace we have come a long way. With modernised plants, we shall be in a position to face WTO challenges and survive. With hard work, vision and devotion we can succeed.
As far as problems of financing for the purchase of grades of cotton higher than the base grade, I shall take up the matter with the banks so that a standard index is developed for financing the textile mills in this respect.
The seminar came to an end after the address of Mr. Mohammad Mian Soomro. The participants were entertained with refreshments.

Acknowledgement
Assistance received from Talha Ahmed Siddiqui, Masood Arif and Muhammad Ali (TIP Students) in preparation of this report is gratefully acknowledged.