Small textile mills in Pakistan are shutting down as the shortage of good quality cotton intensified in the wake of the devastating floods that have wiped out cotton crop from many areas.
Pakistan Textile Exporters Association Patron-In-Chief Khurram Mukhtar told Bloomberg that close to 100 small mills have suspended operations due to a shortage of cotton. According to Mukhtar, the high fuel costs and poor recovery of payments from buyers in flood-stricken areas have also added to the problems.
He further told the publication that small textile mills that mostly produce products such as bedsheets and towels have been the hardest hit. These mills export their products to countries in Europe and the United States. Larger companies have so far not faced any problems since they are well stocked, he added.
According to a recent report published by the Policy Research Institute of Market Economy (PRIME), the loss of the cotton crop is estimated at $1.53 billion (3.24 million bales) due to recent monsoon rains and flash floods in the country.
According to the report, 36 percent sowing area was affected by the monsoon and floods. The country was expecting cotton production to be around 9.03 million bales. However, it is expecting only 5.79 million bales after the floods.
The damage to the cotton crop will have serious consequences for the country as the textile sector accounts for 8 percent of the economy and is a major contributor to the country’s export earnings.
Recently, AN Textile Mills Limited announced that the operations of the mills have been temporarily closed. In a stock filing, the company said that the decision has been taken due to an unforeseen downturn in the market and the unavailability of good quality cotton in the local market because of heavy rains.
The company is just one of the many that has suspended its operations in recent weeks. The closure of textile mills will also worsen the unemployment situation in the country.
Quoting All Pakistan Textile Mills Association Patron-In-Chief Gohar Ejaz, Bloomberg said that Pakistan could be forced to spend $3 billion to import cotton to meet its needs. According to Ejaz, the cotton and energy shortages could affect 30 percent of the country’s textile production.