Pakistan cotton area will fall to a 31-year low next season, as farmers switch to more profitable crops, US officials warn.
The US Department of Agriculture’s Islamabad bureau trimmed ideas for the Pakistani cotton crop, thanks to lower than expected sowings, and boosted import demand.
Even with an expected uptick in yields, the 2016-17 crop was forecast at just 8.0m bales, down from an earlier estimate of 9.0m bales.
Aside from last year’s 7.0m bale crop, this would be the smallest harvest since 2003-4.
“While that is not much in the scheme of the global cotton market surplus, any downward revision to production is still a step towards bring supply back into kilter with demand,” commented CBA’s Madeleine Donlan
And the bureau warned that with farmers cutting back on labour and crop spraying, this year’s harvest could be hit by the same pest outbreaks that ravaged the last crop.
“Time will tell, but 2016 appears to be shaping up as a repeat, or close to it, of 2015,” the bureau said.
Cotton area is forecast to fall to 2.50m hectares, down 300,000 hectares to lowest level since 1985-86.
“Faced with low cotton prices for the second consecutive year, farmers have opted to reduce cotton planting, shifting to corn and sugarcane where possible,” the bureau said.
Corn and sugarcane benefit from a tariff system that insulates farmers from falls in international prices.
The bureau noted that “agronomic, irrigation, and climatic factors limit the degree to which farmers can opt out of cotton” but farmers have switched out of the crop where possible.
Farmers cut costs
And although yields are forecast to rise, the bureau warned that “a repeat of last year’s widespread farmer decision to lower costs for inputs such as insecticides and labour in the face of low market prices continues to be a strong possibility heading into the 2016 harvest”.
The 2015 harvest was hit by widespread pest damage.
The Islamabad bureau noted that “Pakistan’s continued reliance on dated biotechnology makes farmers vulnerable to boll worms, especially pink boll worms, a factor that is worsened if farmers opt not to apply insecticides”.
Pakistani import demand has been revised up some 600,000 bales, to 2.3m bales in the wake of the crop downgrade.
Although still down from last year’s 3.5m bale imports, these would still be the third highest on record.