Promoting Agricultural Value Chains:
In the OIC Member Countries
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The cotton seed is processed in the ginning factories into cotton lint, which is pressed and
converted into bales weighing 480 lb. The ginning sector is fragmented and out of the
approximately 1,000 units country-wide (USDA, 2015) most are small to medium-sized. In
rural areas, small and micro ginning stations are operated for the use of the local community
(Altaf, 2008). The cotton lint is sold through commission agents to spinning factors, where the
cotton fibres are converted into yarn and then sold to weaving units and textile mills.
The textile and garment sector consists of small, medium and large-scale units, most of them
having 50 machines and below. About 450,000 stitching machines are installed in 600 large
and 4,500 smaller units (UNCTAD & Commonwealth Office, 2011). In this part of the chain
significant value added can be captured. For instance, a study by Javed et al. (in Cororaton et
al., 2008) shows that in 2002, the export price for cotton lint was US$ 0.87 per kg, whereas the
value of garments was US$ 13.62 per kg. Therefore, the Government of Pakistan has identified
textiles as a key priority sector, and is taking steps to introduce appropriate policies and
incentives that can spur expansion and draw more private sector investment in this value
added sector (USDA, 2014d). However, the Government also acknowledges that the textile and
garment sector has grown only marginally in recent years due to its limited product range, low
usage of man-made fibres and the inability of manufacturing units to restructure themselves to
meet changing international demands (Government of Pakistan, 2015). In addition, the lack of
skilled human resources, low employment of women in the garment sector, and absence of
modern management practices are identified to obstruct increased value-addition and
enhanced exports in the entire textiles chain (Government of Pakistan, 2015).
The high number of small and medium sized units in the Pakistan cotton and textile value
chain, from producer units through to manufacturing units, shows a high degree of
fragmentation of the industry, without the existence of a single power centre. Chain
concentration and buyer power is most evident in those parts of the value chain not located in
Pakistan, namely branded manufacturers and clothing retailers in consuming countries (e.g.
Lund-Thompsen & Nadvi, 2010).
5.6.5 Trade
Since the abolishment of the export monopoly of the state-owned Cotton Export Corporation in
the late 1980s, exports and imports of cotton have been in the hands of the private sector and
do not fall under any quantitative restrictions or duties imposed by the Government.
Since the mid-1990s, Pakistan has been a net importer of cotton (se , primarily
because of strong demand for better grades of cotton for producing export oriented quality
textile products, whereas domestically produced cotton is mostly medium staple. Large
amounts of extra-long staple cotton are therefore imported from the United States (Pima and
Upland cotton), India (Suvin cotton) and Egypt (Giza cotton). In addition, Pakistan imports
significant quantities of short to medium staple cotton from India and Brazil to augment
domestic supplies for processing and textile manufacturing. In 2014, total cotton imports
declined to 700,000 bales (IndexMundi, 2015), but are expected to rise steeply to 2 million
bales in 2015 due to expectations of weaker domestic cotton production coupled with
increased domestic consumption (USDA, 2015). As global market demand for better quality
fabrics is growing, Pakistan’s textile industry is expected to rely increasingly on imported long
staple and quality cottons.