Cotton output collapse costing Pakistan $2-3bn annually

July 22, 2026 (MLN): Pakistan's cotton production has more than halved from its historic peak, a slump that is now draining the economy of an estimated $2-3bn every year through higher import bills and forgone export revenue.

The report, titled Seeds of Growth, by the Overseas Investors Chamber of Commerce and Industry (OICCI), draws on input from leading OICCI member firms in the agriculture sector.

It argues that the real drag on Pakistan's farm output which contributes roughly 23% to GDP and sustains 37% of the workforce  is not weak technology or thin investment but regulatory delay and policy inconsistency, leaving the country trailing regional peers.

Cotton production has slid from a peak of around 14 million bales to an estimated 6.85mn bales in 2025-26, missing the government's own 10mn-bale target by 34%.

The report traces the decline to climate shocks, pest attacks, substandard seed quality, and a ban on certain pesticide ingredients that was rolled out without a science-based transition plan.

Given that the textile sector  source of 60% of the country's export earnings depends heavily on domestic cotton, the report says lifting output back to 8-9mn bales would take meaningful pressure off foreign exchange reserves.

Maize tells a similar story, the report notes.

Hybrid seed varieties have already tripled per-acre yields over the past three decades, yet the National Biotechnology Policy cleared by the federal cabinet just last month is still awaiting implementation.

That delay, the report says, is holding back biotech corn hybrids that could otherwise unlock a potential USD billion in maize grain and silage exports.

OICCI Secretary General M. Abdul Aleem credited the cabinet for clearing the biotech policy but stressed that its real-world impact hinges on what comes next.

He noted the cabinet's move on biotech maize marks genuine progress, though the yield gains, the export potential, and the investor confidence the policy is meant to unlock remain on paper until it is formally notified and rolled out.

He described this gap between policy direction and implementation speed as a recurring theme across the report, adding that the direction of policy is often right; it is the pace of execution that is costing this sector billions, according to a press release issued.

Beyond cotton and maize, the report points to structural weaknesses across potato, dairy and tobacco.

Certified processing-grade seed accounts for less than 5% of potato output, it says, leaving average yields stuck at 20-23 tonnes per hectare against 30-35 tonnes achieved elsewhere.

In dairy, a sector where Pakistan ranks among the world's top five producers  only 10% of milk is processed, and roughly 20% of total output is lost to inadequate cold-chain infrastructure.

Tobacco, meanwhile, has seen production costs more than double over three years, while an undocumented segment of the industry, concentrated in Khyber Pakhtunkhwa and Azad Jammu and Kashmir, continues to operate outside the tax net.

On fertilizer use, the report flags that nitrogen-heavy urea still dominates farmer application, while potash offtake critical for balanced soil nutrition stood at just 7,000 tonnes in March, despite climbing nearly 40% year-on-year.

The report links these shortfalls directly to Pakistan's ability to hold onto foreign investment, noting that OICCI member companies have already introduced international best practices including seed technology, crop protection tools and precision farming systems that are not otherwise available domestically.

It cautions that further investment will hinge on whether the regulatory environment becomes more predictable.

Among its recommendations, the report calls for time-bound approval processes for seed varieties and pesticide registration, a national strategy to cut post-harvest losses, a dedicated enforcement unit to tackle seed counterfeiting, and wider credit access for smallholder farmers, who make up close to 90% of landholders with under 12 acres.

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