The big flood that hit South Pakistan is another obstacle adding up to an already suffering global industry. After the vast problems caused by the pandemic, the overall price increases of raw materials first and of energy now, the market might be facing hard times in the near future.
The SPIN OFF has contacted various local manufacturers to hear a comment from them in real time, though only a few were available to talk about themselves, about their companies' situation and how they see the future of their country and of the market.
How could such a disaster be avoided?
As more than 33 million people (more than the population of Australia) have been hit by the heavy monsoon rains, some local companies are asking themselves if such a disaster could have been somehow avoided or have lower consequences.
“We are seeing the impact of climate crisis and climate injustice impacting industries with increased frequency globally,” commented Ebru Debbag, executive director global sales and marketing, Soorty, a local global denim specialist company that had recently started the growing of organic cotton in Pakistan, though it had not been hit.
“The industry has to acknowledge that there is and there will be a ripple effect of what happens where denim and jeans are produced, and that will hit retail sooner or later. The industry operates with an inherent time-lapse, where manufacturers are paving the path for the next season almost a year before the brands and the retailers actually ‘buy’ the fabrics and the garments. What I would like to highlight is that we are losing our future, and it is becoming ever more challenging to ‘hedge’ and forecast with all the changing dynamics,” she continued.
Counting damages
The complex and dramatic situation that has been hitting Pakistan cannot be evaluated entirely yet as still statistics of the damages are still in a counting phase. Despite this, initial findings have declared that between 45% and 70% of the cotton crops, as well as other agricultural lands, have been lost.
“It’s a sad situation indeed at the moment. Floods have affected a major chunk of our population and as per some estimates, the losses are around US$4-5 billion. People have lost their lives, means of livelihood and everything they had,” commented Shayan Abdullah, director, Neela by Sapphire Fibres Ltd. “It’s like starting from scratch. Pakistan contributes less than one percent to the total carbon emissions globally, but it is a major recipient of the consequence of global warming,” he continued.
Among the companies The SPIN OFF could reach, most of them were not hit heavily, although their partners were and immediate signs of generosity and solidarity were concretely shown. “Neela remained safe during these floods, and it’s fully operational. Unluckily, our supply chain partners, cotton growers and ginners are severely affected by it,” added Adbullah.
“Though we were growing organic cotton in Lasbella, in Baluchistan, together with WWF and, unfortunately, all the crop is destroyed,” he explained. “As we are in close liaison with them, we are monitoring the situation and are in touch with them. We are involved to help them financially and see how we can play our part to be a part of the solution going forward,” continued Abdullah, explaining how the company has actually initiated a donation drive to help the flood effected.
The group is also in contact with leading charitable organizations and Governmental Agencies to help those who were mostly hit. Moreover, through the company's own Abdullah Foundation it has also distributed food rations in Sindh and is working actively for the rehabilitation of people.
Cotton shortage and higher prices
Pakistan is among the five top cotton growing countries globally, and due to this disaster and previous floods that hit the country in past months in other parts it will take time before the situation returns to normality. Moreover, the market will have to face raw material shortages and related increases of prices in the coming future.
“We see cotton prices and availability becoming an issue in coming months. Due to global warming, cotton crop is effected in The US as well. Coupling it with a ban on Chinese Xinjiang cotton and floods in Pakistan the supply side will remain under pressure and prices may not come as it was expected earlier,” explained Neela’s Abdullah.
Naveena Group, another local manufacturer, had not been hit heavily either as it doesn’t own any cotton fields and because it owns enough stocks to meet its buyers requirements currently, but for the future it will have to follow new strategies.
“Going forward, Naveena has had to pivot its sourcing strategy towards imported cotton. Initially, we had planned to use mostly local cotton but due to its shortage of it we will have to change most of our sourcing towards imported cotton,” said Aydan Tüzün, Executive Director of Sales and Marketing, Naveena Group.
Before the rains, Pakistani cotton was about 10% cheaper than imported cotton. This would be an added advantage for Pakistan and if the rains hadn't destroyed most of the cotton crop. Due to the rains, local entrepreneurs won’t be able to take advantage of the locally produced cheaper cotton and importing cotton will increase costs by about 10%-12%, according to Naveena Group’s Tüzün.
More comments and data could be available in the near future about the ongoing situation of Pakistan. Stay tuned to learn more about it.
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