For the first time in Pakistan’s 78-year history, nearly half of the cotton ginning factories in Punjab’s cotton belt have become inactive due to unsold cotton stock. This development has shocked industry stakeholders, marking a historic downturn in a sector that has long been considered the backbone of the country’s textile-driven economy.
The crisis has been attributed to multiple factors, including unsold inventories, declining cotton prices, unfavorable weather conditions, discrepancies in official production figures, and currency fluctuations. Experts warn that if immediate steps are not taken, the repercussions may extend beyond farmers and ginners, potentially shaking the entire textile and export economy of Pakistan.
What is Cotton Ginning and Why is it Important?
Cotton ginning is the process of separating cotton fibers from seeds. The ginning factories purchase raw cotton from farmers, process it, and supply the lint to textile mills for spinning into yarn.
- Link in the Supply Chain: Without ginning factories, raw cotton cannot be processed, disrupting the entire textile industry.
- Economic Importance: Pakistan’s textile sector contributes nearly 60% of export earnings and heavily relies on ginned cotton.
- Employment: Millions of farmers, laborers, and factory workers are dependent on cotton cultivation and ginning for their livelihood.
The shutdown of 50% of these factories means a severe bottleneck in the cotton supply chain — something Pakistan has never faced before on this scale.
Factors Behind the Cotton Ginning Crisis
1. Unsold Cotton Stocks
According to Ehsan-ul-Haq, Chairman of the Cotton Ginners Forum, heavy rainfall in Punjab’s cotton-growing zones has reduced the quality of cotton. Poor-quality cotton is harder to sell to textile mills, leading to massive stockpiles in factories. The lack of buyers has forced nearly half of the ginning units to halt operations.
2. Decline in Cotton Prices
The cotton markets in Punjab are facing a continuous downward trend in prices. Last week, the price of cotton per maund (approximately 40 kg) dropped by Rs. 100 to Rs. 200, settling between Rs. 16,200 and Rs. 16,300. Analysts fear that the prices may fall further this week, creating panic among farmers and factory owners.
3. Currency Fluctuations
The persistent appreciation of the Pakistani rupee against the US dollar is also affecting cotton prices. Since cotton exports are priced in dollars, a stronger rupee means lower returns for exporters, reducing their purchasing power in the domestic market.
4. Weather and Climate Challenges
Unseasonal and heavy rainfall in Punjab and Sindh has not only delayed harvesting but also damaged standing crops. Cotton, being a sensitive crop, loses quality when exposed to excess moisture, leading to lower demand from buyers. With forecasts predicting more rains, concerns about further quality deterioration are high.
5. Data Discrepancies and Policy Challenges
The cotton industry is also struggling with a major data reliability issue. Reports from the Pakistan Cotton Ginners Association (PCGA) and the Crop Reporting Center Punjab show drastically different figures for production.
- PCGA claims that 301,000 bales were delivered to ginning factories in Punjab by July 31, 2025.
- The Crop Reporting Center, however, reports 609,000 bales for the same period — double the PCGA figure.
Such discrepancies create confusion for investors, exporters, and policymakers, making it difficult to formulate strategies or predict supply trends.
Historical Context: Why Cotton Matters to Pakistan
Cotton is often referred to as “white gold” in Pakistan. For decades, it has been the lifeblood of the textile industry, which is the country’s largest industrial sector.
- Global Standing: Pakistan ranks among the top cotton-producing countries in the world.
- Textile Dependence: Nearly 70% of Pakistan’s textile raw material comes from domestic cotton production.
- Exports: Textiles account for more than half of Pakistan’s total exports, making cotton an essential contributor to foreign exchange earnings.
In previous decades, Pakistan produced enough cotton not only to meet domestic demand but also to export surplus. However, in recent years, climate change, pest attacks, and poor government policies have eroded production levels.
Economic Impact of the Current Crisis
Farmers at Risk
Farmers are the first to feel the brunt of falling cotton prices. With per maund rates declining, many may not even cover their cost of production. This discourages future cotton cultivation, potentially shrinking next year’s crop area.
Ginning Factories in Losses
With 50% of factories shut down, the ginning sector faces massive financial losses. Idle factories still incur maintenance costs, while unsold stock ties up capital, creating liquidity crises.
Textile Mills Facing Shortages
Ironically, while cotton prices are falling locally, textile mills worry about inconsistent supply and quality. This mismatch between availability and usability threatens production cycles in spinning and weaving industries.
Impact on Exports
Pakistan’s textile exports heavily rely on cotton lint. If the crisis deepens, the country may have to import cotton at higher international prices, negatively impacting the trade balance.
Stakeholders’ Concerns
Industry leaders and cotton stakeholders are expressing alarm at the situation.
- Cotton Ginners Forum has demanded immediate government intervention to stabilize prices and ensure the purchase of unsold stock.
- Textile millers are calling for consistent supply of quality cotton to maintain export commitments.
- Farmers’ associations warn that without relief measures, cotton cultivation may decline sharply next season, creating a long-term supply crisis.
The Role of Government and Policy Gaps
Successive governments have acknowledged cotton’s importance but have failed to implement consistent policies.
- Support Prices: Unlike wheat, cotton does not have a guaranteed support price, leaving farmers vulnerable to market fluctuations.
- Research and Development: Limited investment in pest-resistant and high-yield seed varieties has reduced productivity.
- Infrastructure: Lack of modern storage and processing facilities leads to post-harvest losses.
- Data Management: Conflicting reports between PCGA and government bodies highlight the absence of reliable monitoring systems.
Without immediate corrective action, the current crisis could set a dangerous precedent for Pakistan’s agriculture and export sectors.
Possible Solutions to Revive the Cotton Sector
- Introduce Support Price for Cotton: Similar to wheat, a fixed support price would protect farmers from market volatility.
- Government Procurement: State institutions could step in to purchase unsold cotton, stabilizing demand.
- Modern Seed Development: Investment in genetically modified and pest-resistant seeds is essential to improve yields and quality.
- Improved Weather Forecasting: Climate-smart agricultural practices can help minimize losses due to unexpected rains.
- Resolve Data Discrepancies: A unified reporting system is needed for accurate production figures.
- Encourage Exports: Incentives for cotton exports could absorb unsold stocks and bring in foreign exchange.
Looking Ahead
The Pakistan Cotton Ginners Association is expected to release official figures on August 15, 2025, detailing national production, sales to textile mills, exports, and available stocks. These figures will play a crucial role in shaping policies and strategies for the rest of the season.
Until then, uncertainty looms large. Stakeholders are anxiously awaiting whether the government will intervene with relief measures or leave the market forces to decide the fate of cotton.
Conclusion
The shutdown of 50% of cotton ginning factories in Punjab marks an unprecedented crisis in Pakistan’s cotton industry. Triggered by unsold stocks, declining prices, adverse weather, and unreliable data, the crisis threatens the very foundation of Pakistan’s textile-driven economy.
Farmers, ginners, and textile millers are all caught in the storm, while policymakers struggle to provide direction. Unless urgent steps are taken — from setting support prices to improving seed technology and stabilizing demand — Pakistan risks undermining its most crucial agricultural and industrial sector.
For now, all eyes are on the upcoming production report and the government’s response. Will Pakistan take bold measures to rescue its cotton industry, or will this historic downturn deepen into a long-term decline?
