Pakistan Losing Up to $3 Billion a Year as Cotton Output Falls: Report

Pakistan’s declining cotton production is costing the country an estimated $2 billion to $3 billion every year through higher imports and lower export earnings, according to a new report released by the Overseas Investors Chamber of Commerce and Industry (OICCI).

The report, titled Seeds of Growth, says cotton production has fallen from a peak of around 14 million bales to an estimated 6.85 million bales in fiscal year 2025-26, leaving output 34 percent below the government’s target of 10 million bales. It attributes the decline to climate related challenges, pest attacks, poor quality seeds, and restrictions on certain pesticide ingredients introduced without a science based transition plan.

According to the report, the textile industry, which generates around 60 percent of Pakistan’s export earnings, continues to rely heavily on domestic cotton. OICCI said increasing cotton production to between 8 million and 9 million bales would reduce pressure on foreign exchange reserves and lower the country’s dependence on imported cotton.

The report also warned that regulatory delays continue to hold back agricultural growth despite the sector contributing around 23 percent of Pakistan’s GDP and employing 37 percent of the workforce. It said inconsistent policies, rather than a lack of technology or investment, remain the biggest obstacle to improving productivity.

OICCI welcomed the federal cabinet’s recent approval of the National Biotechnology Policy but said implementation remains critical. The report noted that delays in introducing biotech maize hybrids are preventing Pakistan from unlocking significant export opportunities in maize grain and silage. OICCI Secretary General M. Abdul Aleem said the direction of government policy is encouraging, but slow implementation is costing the agriculture sector billions of dollars in lost economic potential.

The report also highlighted challenges across other agricultural sectors. It said less than 5 percent of Pakistan’s potato production uses certified processing grade seed, while dairy producers lose around 20 percent of milk output because of weak cold chain infrastructure despite Pakistan being among the world’s five largest milk producers.

In the tobacco sector, production costs have more than doubled over the past three years, while a large undocumented market continues to operate outside the tax system.

OICCI further noted that fertilizer use remains heavily dependent on urea, with limited adoption of potash needed for balanced soil nutrition. It warned that continued policy uncertainty could discourage foreign investment despite multinational companies introducing advanced seed technology, crop protection products, and precision farming solutions.

The chamber urged the government to introduce time bound approvals for new seed varieties and pesticides, strengthen action against counterfeit seeds, develop a national strategy to reduce post harvest losses, and expand access to agricultural financing for smallholder farmers, who account for nearly 90 percent of Pakistan’s landholders.