CORRELATION BETWEEN COTTON PRICES AND PRODUCTION OF COTTON IN PAKISTAN

摘要

Cotton, the "White Gold", is an important cash crop of Pakistan and is the most important pillar of the economy. It contributes about 1.4% to GDP and 6.7% (Pakistan Economic Survey, 2015) to total value addition in agriculture. Cotton market prices always induced the grower to put more cotton area under seed cotton, resulting in production increases. Growers have been trying to capitalize on the cotton crop in order to achieve better yields. Sophisticated procedures, methods and pesticides were usedwhich have resulted in higher costs of production. As the cost of production increased, the profit ratio of the cotton crop declined. Continuous decline in demand during the last three years has pushed cotton prices to the lowest profit margins for the grower. This paper aims to analyze the correlation between cotton prices and production of cotton in Pakistan. The general objective of the study is to determine how much price impacts the cotton grower's attitude to bring his cultivable area under cottoncrop, ultimately resulting in increased production.