Pakistan’s textile units shut down due to cotton shortage

The already fragile Pakistan economy, hit hard by the devastating floods, now faces the shutdown of textile factories as the cotton crop has been destroyed.
A cotton shortage has forced the owners to shut down textile factories after the floods. The mill closures underscore challenges for the sector that employs about 10 million people, accounts for 8 percent of the economy, and adds more than half of the nation’s export earnings. While the larger firms are less affected as they are well stocked, Pakistan’s small factories making bedsheets and towels for export to the US and Europe have started to shut down.
The Pakistan Textile Exporters Association’s patron-in-chief, Khurram Mukhtar, said that a shortage of good quality cotton, high fuel costs, and poor recovery of payments from buyers are the reasons behind the closing of small textile mills.
Mukhtar said that larger firms supplying global companies like Nike, Adidas AG, Puma SE, and Target Corp are well stocked and hence, they are less affected. The recent floods, which submerged a third of Pakistan, killed more than 1,600 people and damaged about 35% of the cotton crop. The latest blow comes at a difficult time for the South Asian nation, already struggling with high inflation and falling currency reserves.
Due to an “unforeseen downturn in the market and unavailability of good quality cotton” following heavy rains and floods, the company’s mills have been temporarily closed, Faisalabad-based AN Textile said in an exchange filing earlier this month.
Cotton production in Pakistan could slump to 6.5 million bales (of 170 kilogrammes each) in the year that started in July, compared with a target of 11 million.