KARACHI - Deep crisis has gripped the cotton industry. Once a bumper crop and a good foreign exchange earning item of the country, it is now in shambles. Cotton yarn exports have taken place at a fast track speed, the concerned ministries of commerce and textile were nowhere in sight as far as the cotton yarn export was marching ahead. Coming on a more poignant approach, Pakistan needs to access crop estimation system, in this way senseless neglect will not be prolonged. It is a very interesting to note that cotton, rice, wheat, sugar, tea, edible oil and various other products, Pakistans cotton production is cyclical in nature with at least one bumper crop in every 3 to 5 years. During the prevailing season, till-date, cotton arrival portrays that the country is all set to record another such bumper cotton crop after a subdued outputs in the last 4 seasons. Till December 15, 2009, the countrys total cotton arrival recorded at 11.3 million bales as per the latest numbers released by Pakistan Cotton Ginners' Association (PCGA). This represents an increase of 24pc over the arrival of 9.1 million bales during the comparable period of last year. Up to December 15, 2009, 93pc of the output targeted has been arrived at ginners versus only 80pc of final production in the last year. Encouraging numbers indicate that the domestic cotton output to beat the initial and revised governments targets of 12.1 million bales and 13.36 million bales. Importantly, at the on set of current season, government had fixed total production target of 13.36 million bales and then revised downward to 12.1 million bales - still 7pc higher over the actual production of 11.35 m bales in the last season - reportedly due to viral attacks in Punjab and Sindh. However, the arrival trend indicates quite lower impact of this factor on the domestic cotton output as against the government anticipations while revising its annual target to 12.1 million bales. On segregated basis, so far, cotton arrival in Punjab depicted an increase of 14pc to 7.45 million bales, while in Sindh it has increased by 50pc to 2.57 million bales. In contrast to domestic scenario, on global front, cotton production is to decline by 5pc to 102 million bales in 2009-10 from 107 million bales in the earlier season, as per the recent press release by International Cotton Advisory Committee (ICAC). This is the third consecutive decline in world cotton production. The committee attributes this decline to a drop in yield due to lower cotton price competitiveness as compared to competing crops. In this regard, the committee mentioned a notable decline of 16pc in Chinas production at 31.3 million bales. On the other hand, cotton consumption is expected to increase by 2pc at 109 million bales on the back of reviving global economic activity, widening the demand-supply gap by 7 millionn bales. According to the committee, out of seven major cotton consumers, only China, India, Pakistan and Bangladesh are likely to post growth in consumption in 2009-10. Moreover, ICAC also predicts higher prices in 2009-10 at 69 cents/lb from 61.20 cents/lb in 2008-09 - 13pc up Y-o-Y. Despite an anticipated bumper crop, local cotton prices are posting a similar trend as it shows strong correlation with international cotton prices. Currently, domestic prices are hovering at a record level of Rs 4,300/maund (37.32kgs), up 48pc from its one-year low level of Rs 2,900/maund in December 2008. Since October 2009, local cotton prices are depicting consistent increase despite sanguine picture from the production front. This is attributable to excess buying by the exporters in order to avail the arbitrage opportunity present in the international market due to crop shortage. However, we believe that the domestic textile sector is not likely to receive any significant impact from this price increase as reportedly the industry has already procured around 9.4 m bales as against 6.8m bales procured during the last season. A gloomy outlook for cotton harvest was anticipated at the sowing time as area under cotton dropped by 7.7 percent in FY 09. The decline in area was attributed to farmers response to lower cotton prices relative to other crops. However, favourable weather in cotton belt coupled with rise in prices during the growing phase of cotton crop motivated farmers to put more efforts to enhance yield. Another factor that helped boost yield during FY09 was increased cultivation of cotton.