LAHORE, Pakistan — The worst floods in Pakistan’s history have disrupted the lives of 20 million people, with much of the devastation in smaller towns and villages near rivers, including the standing cotton crop.
This story first appeared in the August 17, 2010 issue of WWD. Subscribe Today.
The crop, at the point of being harvested, has taken a substantial hit with 10 to 30 percent ravaged by the floodwaters. Industry analysts estimated 700,000 acres of cotton cropland is under water and from 1 to 3 million bales out of an estimated 2010 harvest of 14 million bales of cotton, has been laid waste. This includes about 5 percent of the crop in Punjab and 20 percent in the harder hit province of Sindh.
Pakistan is the world’s fourth largest cotton producer after China, India and the U.S. Even before the floods, there were concerns about global cotton shortages this year. The U.S. Department of Agriculture has warned that demand may outstrip supply. World cotton production is forecast to increase to 113.9 million bales in 2010-11, an 11 percent increase from 102.9 million bales in 2009-10, the USDA said. However, world consumption may rise to 119.1 million bales next season from an estimated 115.9 million.
Zaki Saleemi, an executive with Umer Siddiqui Apparel & Textiles, said despite the crop losses, the supply and price of Pakistan cotton should not suffer too much. After floodwaters recede by late September, reconstruction needs assessment teams from the Pakistan government, World Bank and Asian Development Bank will release data on the full extent of the losses.
“Due to instability in Bangladesh and rising production costs in China, Pakistani mills are experiencing a surge in inquiries and orders,” Saleemi said. “Since it was a bumper cotton crop to begin with, and most of the flooding occurred in the reclaimed land of riverbeds, one must not panic and drive the price out of the market. At the most, we may import some yarn to fulfill orders if need be.”
Imran Iqbal, general manager of Three Star Spinning and Active Apparels, with facilities in Multan and Lahore, agreed there was no reason to panic about the crop, adding that as soon as the rain stops, the price of cotton in the local market would decrease by 20 percent.
World Bank President Robert Zoellick said the floods in Pakistan may have destroyed total crops worth about $1 billion. Estimates of the death toll vary, but at least 1,600 people are believed to have been killed and health officials fear outbreaks of disease because of a lack of basic services, as well as a lack of food.
The main industrial towns of Karachi, Lahore and Faisalabad, as well as the primary transportation connections, have mostly been spared, although there have been difficulties with workers getting to the factories.
“Though the outer, lower-lying areas of Multan, in Punjab, are under water right now, our mill, like others, has been spared, as it is located on higher ground nearer the city center,” Iqbal said. “Our labor, however, comes from the flooded part of the city, which is why we are having labor issues. So far, we have managed to avoid production delays by hiring extra labor. Some spinning mills in southern Punjab towns, like Bahwalpur and Muzaffargarh, that are completely flooded have suspended production, again due to immobility of labor.”
Imran Hussain, director of BNS Air Services, a freight forwarding company used by U.S. importers such as Nike Inc., Levi Strauss & Co. and Wal-Mart Stores Inc., said the main transportation network between the industrial towns and the port city of Karachi had not been affected.
There are a few mills citing the floods as the reason for late shipments, said Imran Lateef of Texlyn, a textile buying house based in Lahore, although some importers have asked the mills to air freight shipments out of concern for delays at the ports. But for the most part they are sticking with ocean freight, since delays have been minimal.