Despite obstacles, phutti arrivals hit 1.1m bales

Lahore has witnessed a 25% increase in phutti (seed-cotton) arrivals this season, totaling 1.114 million bales by August 15, according to the Pakistan Cotton Ginners Association (PCGA). Sindh led the surge with a 42% increase to 734,000 bales, while Punjab saw a modest 3% rise to 379,000 bales. Despite the impressive figures, the industry faces discrepancies in data reporting and fiscal challenges.

The Punjab government reported cotton production at 585,000 bales, significantly higher than the PCGA's count. Additionally, 60,000 to 70,000 bales are moving from Sindh to Punjab due to higher prices, masking the true local output decline in Sindh. Heavy taxation is also causing market transparency issues, with an estimated 100,000 bales sold illegally due to high sales taxes.

Sindh's Sanghar district is the main production center, accounting for 75% of Sindh's output and half of the country's total arrivals. Meanwhile, Punjab's Rahim Yar Khan is seeing minimal cotton arrivals due to farmers shifting towards sugarcane farming, driven by government incentives. This shift costs the country between $6 and $7 billion annually in imports of raw cotton and edible oil.

Currently, 951,000 bales have been procured by textile mills, 13,000 bales by exporters, leaving 163,000 bales unsold in Punjab and Sindh. With cotton arrivals expected to increase in the upcoming week, experts warn of potential price drops and call for government intervention to protect cotton acreage from sugarcane encroachment.