Pakistan’s cotton industry, a mainstay of the national economy in the past, is presently experiencing a drastic decline. In a recent study, the International Labour Organisation (ILO) identifies several reasons for this slump, with specific focus on the overlooked contribution of human infrastructure.

From wasteful use of land and obsolete farming methods to abusive labor practices and dearth of financial assistance, problems plaguing cotton farmers and industry workers are enormous. In spite of its role in agricultural GDP and foreign exchange reserves, the industry continues to be in crisis, needing immediate intervention to revive its lost glory. The local cotton sector is on the brink of collapse as an avalanche of tax-free imports of cotton and yarn destroy the livelihood of local farmers, ginners, and textile mills. Within a span of six months, between July and January, the country imported more than 1.5 million bales of raw cotton and 1.25 million bales of cotton yarn, pushing aside local production and causing financial upheaval throughout the industry.

With imported yarn and cotton exempt from sales tax, the local business of cotton and seed cotton (phutti) has practically come to a standstill. Ginning mills are filled with unsold inventory, while farmers and traders are left struggling with record phutti surpluses. Consequently, many ginning factory owners are on the brink of bankruptcy, and reports suggest that more than 40% of spinning mills have closed their operations. Industry experts predict that if the crisis continues, cotton planting may decline sharply during the next planting season, adding to the already dismal state.

Most in the sector blame government policy for the crisis. Top cotton ginning figures contend that an 18% tax on locally made cotton and yarn—while imported cotton is not taxed at all—has forced textile mills to have no option but to drop local sourcing wholesale. Figures from the All Pakistan Textile Mills Association (APTMA) indicate that from July to January 2024-25, yarn worth 169 million kilograms, which is approximately 1.25 million bales, was imported by owners of textile mills. At the same time, 1.5 million bales of cotton were imported from Brazil and the United States. For the first time in history, Pakistan has emerged as the world’s biggest purchaser of American cotton, while China remains the leading source of imported yarn. Pakistan has already signed contracts to import 3.5 million more bales, and estimates are that overall imports will hit a whopping 5 million bales at the close of the 2024-25 cotton season.

While foreign cotton imports surge, the country’s indigenous output is still plummeting. This year, Pakistan will apparently yield only 5.55 million bales—50% below quota and a full 34% off last year’s abysmally low level. Despite all-time record-breaking imports, home-grown ginners can’t get rid of 500,000 unbought bales of cotton, which is 31% more overage than it was last year. Declining demand has also pushed cotton and phutti prices down, raising fears that farmers will cut cotton cultivation even more.

The importance of cotton to Pakistan’s economic and agrarian environment cannot be overemphasized. The crop underpins the fabric industry, spurs exports, and gives direct and indirect jobs to millions of employees in both the farming and manufacturing sectors. And yet, even with its indispensable function, cotton cultivation has been steadily going down over recent years, which lays bare the industry’s incapacity to incorporate contemporary agricultural progress. Without drastic action, Pakistan faces further debilitating of an industry which has for long been the bedrock of its economy.

Recent research conducted by the International Labour Organisation (ILO) into “Mapping the Cotton Supply Chain at the Community Level in Pakistan” illustrates various challenges faced by the nation’s cotton sector. Among the most serious issues identified, the study underlines a central shortage of “human infrastructure”—a factor which has played the major role in the current dwindling of cotton production. According to the report, which questioned chosen districts within Punjab and Sindh, the number of 1.5 million farmers are estimated to plant cotton in Pakistan. Interestingly, more than 90% of this crop is produced on tiny farms of up to five hectares. These fragmented ownerships render efficient land use problematic, and restrict the implementation of sophisticated agricultural practices and high-tech equipment, finally stifling productivity and sector growth.

Among the main challenges to increased yields is non-mechanization. Cotton-picking is still largely a labor-intensive operation, which not only affects efficiency but even raises the risk of contamination, reducing both the output and quality of the cotton produced. The other critical issue is excessive dependence on genetically engineered Bt cotton, which dominates the cotton seed market of over 90% in Pakistan. With the passage of time, Bt cotton has weakened its resistance against pests, exposing crops to attacks. Though the government programs intend to promote a shift towards more robust and high-yielding seed varieties, small farmers do not have the resources or knowledge to switch.

Beyond farming practices, the report highlights structural challenges that hinder progress. Many farmers struggle to access formal financing, while available agricultural machinery is often ill-suited for small-scale farms and inaccessible to women working in the sector. Additionally, research and development in the cotton industry have been largely neglected, further stalling innovation and improvement. Most alarming, perhaps, is the absence of representation for the rights of marginalized farm labor and farmers—particularly women and children—who are the backbone of the cotton value chain. Without a strong voice in policy deliberations, the welfare of these workers is frequently disregarded. Even though the cotton industry contributes 10% to Pakistan’s agri-GDP, maintains over half of the country’s foreign exchange reserves, and provides livelihoods for millions, the rewards hardly trickle down to the most marginal farmers and workers.

The sector is also plagued by exploitative working conditions, especially in cottage industry and small-scale power loom units, where child and forced labor continue to exist. The other major obstacle is the low literacy level of workers in the cotton sector—70% of farm laborers and 40% of farmers are illiterate. This lack of education hinders them from embracing new farming methods, further slowing down the sector’s development towards mechanization and efficiency.

Turning around the slide of Pakistan’s cotton sector requires more than enhanced seed quality or mechanization—it needs a transformation in how the industry serves its workers. Education, financial access, advanced agricultural methods, and workers’ rights are key to ensuring long-term viability. Without these changes, farmers will continue to forego cotton for more lucrative prospects, further fragmenting a crop that has always been the cornerstone of Pakistan’s economy. Rebuilding is daunting, but strategic planning and perseverance in human as well as structural development can resurrect Pakistan’s cotton industry to great heights.