Linking Agricultural Risk Management with Cotton Value Chain (CVC) in Pakistan
Saleem Ashraf *
Muhammad Iftikhar**
Babar Shahbaz***
Muhammad Luqman****
Ghazanfar Ali Khan*****

Cotton is one of the most important cash crops of Pakistan and its value chain (Cotton Value Chain – CVC) has strategic importance in the national economy (Govt. of Pakistan 2013). The textile sector of Pakistan is based upon cotton productivity. This sector contributes more than 54% to the total export earning and 8.5% to the national GDP (Ibid.). The textile sector accounts for 46% of total manufacturing and provides employment to about 37% of the total labour force (Ibid).

In Pakistan, the cotton value chain is long as it starts from raw cotton cultivation, picking then conversion into lint and packed bales through a ginning process. This whole chain requires large number of workers providing them employment and helping in poverty alleviation. At present, per acre cotton productivity is on the decline  and quality is also below standard as compared to other major cotton producing countries  (Usmani 2012). This is because of the sensitive nature of cotton. This sensitivity leads to several risks known as ag-risks. These risks are of various types, for instance climatic variability leads to production risks which is causing severe decline of cotton, not only in Pakistan but also around the globe (OECD 2013).

Farmers’ conditions in Pakistan are not prosperous; they fail to provide essential inputs to the crop because of financial constraints, poor quality and adulterated inputs, non-availability of inputs, climatic variability etc. The management of ag-risks is important to sustain the cotton value chain. This paper explores and categorises the risks (production, human, marketing, financial and legal) involved in the whole cotton value chain. Production risks are initial risks and lead to all the other risks since they are interconnected (OECD 2011) and have severe influence on the cotton value chain. Based on empirical research the paper recommends mitigating and coping strategies such as crop sharing, information sharing, spread sales, forward contracting and adoption of improved practices followed by resource conservation and attention towards smart agriculture. In this regard, role of public sector extension should be diversified by the Government. Moreover, crop insurance, subsidized loan and income support programmes especially for farmers could be another option. To cope with climate variability, establishment of early warning systems is needed.

References

Government of Pakistan 2013, ‘Pakistan Economic Survey 2012-2013’, Ministry of Finance, Govt. of Pakistan, , accessed 11 Sept. 2013.
 

[1] In 2010-11, total cultivated area of cotton was 2835 ha with production of 13595 thousand bales. In 2012-13, cotton was cultivated on 2879 ha area greater than previous year but production was lower 13026 thousand bales with per ha yield of 769 kg lesser than previous year where it was 816 kg/ha (GoP 2013).

[1] Contamination, poor ginning machinery, increasing cost of production, raw material prices and energy crisis are affecting the quality of cotton and cotton fibre. To sustain and increase market share these problems need to be eliminated (GoP 2013).

OECD 2013, ‘OECD-FAO Agricultural Outlook 2013’, OECD/Food Agriculture Organization of the United Nations, OECD Publishing, , accessed 11 Sept. 2013.
OECD 2011, ‘Risk Management in Agriculture: What Role for Governments?’ Organisation for Economic Co-operation and Development, Paris, France, , accessed 11 Sept. 2013.
Usmani, F. 2012, ‘Textile Industry of Pakistan’, Utrade Online, , accessed 11 Sept. 2013

 

* Mr. Saleem Ashraf is a Ph.D. Scholar at the Institute of Agriculture Extension and Rural Development, University of Agriculture, Faisalabad, Pakistan.
** Mr. Muhammad Iftikhar is an Assistant Professor at the Institute of Agriculture Extension and Rural Development, University of Agriculture, Faisalabad, Pakistan.
*** Dr. Babar Shahbaz is an Assistant Professor at the Institute of Agri. Extension & Rural Development, University of Agriculture, Faisalabad, Pakistan. He is also a Visiting Fellow at the Sustainable Development Policy Institute (SDPI), Pakistan. His research interests include sustainable livelihoods, food security, agri. extension and rural development.
**** Mr. Muhammad Luqman is an Assistant Professor at the University College of Agriculture, University of Sargodha, Pakistan.
***** Mr. Ghazanfar Ali Khan is an Assistant Professor at the Institute of Agriculture Extension and Rural Development, University of Agriculture, Faisalabad, Pakistan.