Government Intervention in Pakistan's Cotton Sector

摘要

Pakistan can generally export cotton competitively at world prices, and production is expanding despite the burden of Government intervention borne by its producers. The Government's main intervention in the cotton sector was its monopoly on exports. By restricting exports, the Cotton Export Corporation (CEC) depressed domestic prices to favor the textile industry. In 1988/89, the Government continued to liberalize cotton exports by allowing private exporters to purchase cotton in the open market, instead of from the CEC. Such exports are now subject to a minimum export price and an export duty. In 1985/86 and 1986/87, when a world glut caused a sharp decline in prices, the Government subsidized exports (via CEC trading losses) to maintain its foreign exchange earnings and limit a costly buildup of stocks. Government intervention was measured using producer and consumer subsidy equivalents.