3. ROLE OF COTTON IN PAKISTAN'S ECONOMY.

3.1 Cotton and Pakistan are synonymous. The oldest cotton Seed extent (9,000 years old) was discovered in Mehergarh in Baluchistan. In the near past American Upland cotton seed used be imported by East India Company. The first indigenous, upland cultivar namely 4F was introduced in 1884. Roberts (1915)

3.2 Cotton is vital for the economy of Pakistan as cotton and its products earn about 60% of the total foreign exchange of the country. As stated earlier there are over 1,000 ginning factories, over 400. textile mills in the organized sector. In addition, about 250,000 power looms have been installed in the unorganized sector. This unorganized sector has assumed importance as it is providing employment to over half a million workers. Multiplier effect of this activity is partly priming the economic engine of the country.

3.3 INCOME OF COTTON FARMERS

3.3.1 Successful research for evolving high yielding cultivars and other measures have been responsible for increasing the income of cotton farmers. Prosperity of the rural areas, especially of Punjab, correlate directly with success in cotton research.

3.3.2 Increase in the income of cotton farmer over the years evident from the following:-

Production of cotton during 1983-84	= 2.8 million bales.
Production of cotton during 1995-96	= 10.2 million bales.
Assumed price of one bale of cotton	= Rs.10,000.00
Increase in income of farmers due to
Increase in production.	= Rs.74,000 Million
	or US$2,000,00 Million
	Pak Rupees 37.00 =US$1.00

3.4 VALUE ADDITION.

3.4.1 One ounce of gold worth US$350.00 when converted into a watch worth US$ 4,000.00 is what value addition is all about. Equation for cotton yarn can be expressed as:
Sale price of yarn = Cost of cotton + Cost of conversion + Profit

$2.94 $1.94 + Rs.31/46 + Profit. (A)

Rs.102/90 = Rs.67/90 + Rs.31/46 + Profit.

Profit = Rs. +3/54.

 A- Pakistan Textile Vol. 21 No 1&2, June, 1997.

 3.4.2 Value addition for yarn in Pakistan is on the low side. Similar yarn from Turkey or South Korea will fetch at least twice the sale price of Pak yarn, In the case of Pak yarn the element of raw material is around 60% of the sale price of yarn. This is the premises on which KCA has built its case for the export of cotton in preference to yarn. Akbar Sheikh (1998) is of the opinion that Pakistan textile industry’s economic value addition is NEGATIVE (possible return on assets at bank interest rates minus profit earned).

 3.4.3 According to APTMA, during 1995-96, they earned 118.6% more F.E. by exporting cotton cloth than yarn. This figure is debatable. However, the significant point is that according to EPB (13-11-97) indigenous cotton fabrics fetched following prices:

• Cotton sheeting M², USA-US$ 0.51

• Cotton Poplin Broad cloth M², USA US$ 0.63

• Cotton Fabric (Kg) EU US$ 4.01

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