Promoting Agricultural Value Chains

In the OIC Member Countries

111

Figure 5-20 Cotton exports and imports of Pakistan, 1994-2014

Source: IndexMundi, 2015

At the same time, Pakistan continues to be a major exporter of cotton. In 2014, exports

amounted to 600,000 bales and are forecast at 500,000 bales in 2015 due to an expected weak

cotton harvest. However, exports of cotton products, especially as textiles and garments, are

expected to increase, as Pakistan has been granted “Generalized System of Preferences” (GSP

Plus) status to the European Union from 2014 through to 2017, which allows 20 percent of

Pakistani exports to enter the EU market at zero tariff and 70 percent at preferential rates.

These concessions serve to help Pakistan’s economy recover from the devastating 2010 floods.

Since 30 percent of Pakistan’s textile exports are destined for the EU, the GSP Plus status may

increase textile exports to the EU by US$ 1 billion every year. This is expected to raise imports

of cotton to satisfy export demands (USDA, 2015).

Of particular note is the increasing trade in cotton and cotton products between Pakistan and

India which has developed since 2003/04, despite continued unresolved political issues.

Cotton imported from India increased from US$ 455 million in 2004/05 to US$ 716 in

2012/13, making India the biggest supplier of raw cotton for Pakistan and turning Pakistan

into the biggest destination for Indian agricultural exports (39 percent of total agricultural

exports) (Chand & Saxena, 2014). Vice versa, Pakistan also exports small amounts of raw

cotton to India, but mostly sells value added cotton fabric and textiles to India, which in

2012/13 was worth US$ 60 million (Chand & Saxena, 2014). The growing trade is facilitated

through the reduced tariff limits under the South Asian Free Trade Area (SAFTA), which

dictates a reduction of tariffs to 5 percent with effect from 1 January 2013.

5.6.6

Conclusions and lessons learned

Pakistan is one of the main players in global cotton production and consumption, and the

cotton and textile sectors are the mainstay of the country’s economy. While yields and cotton

output have increased over the past two decades, Pakistan has not been able to take full

advantage of its cotton production. Seed quality and agricultural practices are generally poor,

and pest infestations and cotton diseases lead to huge economic losses each year. Therefore,

500

1000

1500

2000

2500

3000

3500

4000

4500

1,000 bales (1 bale = 170kg)

Exports

Import