Sustainable Cotton Farming in Pakistan: Policy Priorities

Explore how Pakistan can revitalize cotton farming through climate-resilient seeds, affordable inputs, research, credit, crop insurance and fair markets. An integrated approach can strengthen the Pakistan cotton industry while making sustainable cotton farming more profitable and resilient.

POLICY BRIEFS

Abdul Ghafoor, Khadija Yasen & Muhammad Hafeez

11/12/2026

a field full of cotton plants covered in snow

Pakistan’s cotton economy is contracting at the farm gate, and the available evidence suggests that declining profitability, rather than technical constraints alone, is an important factor behind this trend. According to provisional official statistics for 2025–26, cotton was cultivated on approximately 2.01 million hectares, representing a 1.5% decline from the previous year, while production eased to 7.05 million bales. This reduction reflects farmers’ changing crop choices as they compare expected returns, production costs and available Kharif alternatives. During the same period, increased cultivation of competing crops, including sugarcane and wheat, highlights how profitability influences decisions about land allocation.

The consequences extend far beyond individual farms. During July–March 2025–26, textiles and apparel accounted for 59.7% of Pakistan’s total exports, making the sector a major pillar of export earnings. Its performance depends heavily on a reliable supply of domestic cotton for ginning, spinning and downstream manufacturing. Cotton cultivation also supports edible-oil production through cottonseed. Pakistan produces approximately 216,000 tonnes of edible oil against total domestic production of 550,000 tonnes, while remaining 89% dependent on imports. Cottonseed therefore contributes to reducing the country's oilseed deficit and supports related processing industries.

Continued contraction in cotton cultivation could consequently increase pressure on raw-material imports, weaken industrial linkages, affect the trade balance and reduce seasonal employment across rural communities and the cotton value chain. The challenge is therefore not simply to restore cotton acreage, but to make cotton production economically attractive and commercially sustainable for farmers.

This requires examining farm-level profitability, input costs, market incentives and competition from alternative crops. At the same time, circular bioeconomy innovations offer opportunities to generate additional value from cottonseed, stalks, linters and other by-products through feed, bioenergy, organic inputs and industrial applications. Linking improved farm returns with resource efficiency and value addition could help revitalise Pakistan’s cotton economy while strengthening its industrial and rural foundations.

Farm-Level Constraints and the Untapped Potential of a Circular Bioeconomy

Farmers generally select crops according to expected profitability, cash-flow requirements and production risks. From this perspective, cotton has increasingly become a less attractive option compared with competing Kharif crops. It has a relatively long growing period, requires repeated applications of agricultural inputs and remains vulnerable to pest infestations, changing weather patterns and untimely rainfall. Farmers also have limited control over harvesting schedules and marketing arrangements, while fluctuating market prices create uncertainty about whether their final returns will cover production costs. Consequently, even when cotton yields remain around 596 kg per hectare, the Cotton Production Index has declined to approximately 71 against the 2015–16 baseline of 100. Competing crops offering better expected prices and quicker cash flows can therefore become more appealing.

High production costs further discourage cultivation. Fertiliser accounts for a substantial share of cotton production expenditure, while the availability of quality seed remains another concern. Cottonseed requirements were estimated at approximately 20,900 tonnes, with only around half of the requirement met. This shortage forces many small, tenant and indebted farmers to rely on seed of uncertain quality, increasing production risks. For households with limited land, working capital and alternative income sources, a poor cotton harvest can have serious financial consequences. Their preference for crops perceived as less risky is therefore an economic response to uncertainty rather than simply a lack of technical knowledge.

Circular bioeconomy offers an additional opportunity to improve the economic attractiveness of cotton. Cottonseed, stalks, gin waste and other by-products can be converted into edible oil, livestock feed, fuel pellets, biochar, compost and other industrial inputs. However, much of this potential remains underdeveloped. Cotton stalks are frequently burned in fields or used as household fuel instead of being collected and converted into higher-value products. Pakistan's Alternative and Renewable Energy Policy 2019 recognises agricultural residues as potential biomass resources, while the commissioning of a 32 MW bagasse-based power plant in October 2025 demonstrates the potential of agricultural waste for energy generation.

Nevertheless, cotton residues present different logistical challenges from sugarcane bagasse, which is concentrated at processing mills. Cotton stalks are scattered across small farms and require organised collection, drying, storage and transportation. Without aggregation systems, transparent pricing and accessible processing facilities, intermediaries and processors may capture most of the value, leaving farmers with little additional income. Circular bioeconomy initiatives must therefore be assessed for their technical and commercial viability, with farmers included in value-sharing arrangements. Only then can residue utilisation become a meaningful incentive for sustaining cotton cultivation.

Policy Recommendations and the Way Forward

The first priority should be to restore the underlying profitability of cotton cultivation. This requires sustained investment in climate-resilient, high-yielding and pest-tolerant cotton varieties, supported by adequate and predictable funding for agricultural research and extension services. District-level coordination of pest surveillance and integrated pest management can help reduce crop losses and unnecessary pesticide expenditure. Reliable availability of essential inputs, particularly quality seed and DAP fertiliser, is equally important. Existing support programmes, including Punjab's Kissan Card, should provide wider and more accessible coverage to tenant farmers and small landowners, who often face the greatest financial constraints.

Risk management must also reflect the specific challenges of different crops. Although the outlook for agricultural lending in 2025–26 is approximately Rs. 3,062 billion, the increase in outstanding agricultural borrowers was only 1.2%, suggesting that access to formal finance remains limited for many small farmers. Linking seasonal input credit with affordable crop insurance could help protect growers against climate-related losses, pest attacks and other production shocks. Flexible loan repayment and rescheduling arrangements following verified crop damage would further reduce the financial risks associated with cotton cultivation. Such measures are particularly important for indebted households that cannot absorb successive production losses.

Circular bioeconomy initiatives should initially be introduced through carefully designed pilot projects in major cotton-producing districts. Transparent purchasing arrangements and open contracts for cotton stalks, cottonseed and ginning by-products could establish more reliable markets for agricultural residues. Farmers should receive clear information about prices, collection arrangements and quality requirements, with priority access to these emerging markets. Local aggregation centres, farmer cooperatives and partnerships with processors could reduce collection and transportation costs while improving growers' bargaining power.

Most importantly, these initiatives should be evaluated against measurable improvements in net farm income, employment generation and resource efficiency before being expanded. Circular innovation should complement, not replace, efforts to improve cotton productivity and market returns. Pakistan cannot expect farmers to sustain cotton cultivation solely to supply its textile industry. Long-term recovery requires making cotton commercially attractive at the farm gate while ensuring that smallholders share fairly in the additional value generated throughout the cotton value chain.

Conclusion

Pakistan’s declining cotton cultivation requires a coordinated policy response that addresses farm-level profitability, production risks and weaknesses across the cotton value chain. The shift towards competing crops reflects farmers’ economic decisions and cannot be reversed through acreage targets alone. Policy priorities should include improving access to climate-resilient seed, ensuring affordable inputs, strengthening agricultural research and extension, and expanding credit and crop insurance for smallholders and tenant farmers. Equally important is the development of commercially viable markets for cottonseed, stalks and ginning residues through circular bioeconomy initiatives. Pilot projects, transparent pricing, farmer-led aggregation and partnerships with processors can help establish these markets while ensuring that growers receive a fair share of the additional value. Government, research institutions and the textile industry must work together to align industrial raw-material requirements with farmers’ economic incentives. Revitalising cotton requires a shift from production-focused interventions towards an integrated policy framework that makes cultivation profitable, resilient and sustainable.

Please note that the views expressed in this article are of the author and do not necessarily reflect the views or policies of any organization.

The writers are affiliated the Institute of Business Management Sciences, University of Agriculture, Faisalabad, Pakistanand can be reached at khadija.yasen@uaf.edu.pk

Sustainable Cotton Farming in Pakistan: Policy Priorities

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