Exploring Dynamics of the Cotton Seed Provision System in Sindh Province – Reducing Barriers to Entry in Cotton Seed Market

Cotton production is critical to Pakistan’s economy. In 2011, it was grown by more than 1.3 million farmers on about 6.6 million acres, mainly in the provinces of Punjab and Sindh. Total annual cotton production in Pakistan has hovered around 12-13 million bales during the last 5 years. At this level of production, it contributed 6.9% to the value added in agriculture and 1.4% to GDP. Despite substantial improvement during the last few decades in productivity per unit of land, the average yield in Pakistan (7.3 maunds of lint per acre) is lower than the world average (8.3 maunds per acre). This is due to a number of factors, such as pests and diseases, water shortages, high temperatures, etc.

The effect of these constraints is confounded by the absence of an effective seed provision system. Currently, cotton seed is provided to the farmer by a mix of public and private sectors in a poorly regulated and documented environment. Consequently, it is common for the farmer to have to deal with poor quality and impure seed that does not germinate well and provides poor returns to his investment and labour.

A robust and dynamic cotton seed industry has not yet developed in Pakistan due to several reasons. Perhaps the most important is the archaic regulatory framework, which encourages breeders and seed companies to operate outside the regulatory framework. The Seed Act of 1976, which provides the legal framework under which seed is produced and distributed, envisages a rather limited role for the private sector. Further, development of new varieties does not create any legally enforceable right for a breeder.

Efforts to improve the seed provision system are further hampered by a rather limited knowledge about the sources of seed provision, their respective shares in the market and the dynamics in each case. The available body of literature and data collected by public and private sector organisations are inadequate. In the absence of rigorous research and reliable data that such research could have produced, public policy has to place exclusive reliance on anecdotal evidence in important matters, such as developing an effective legal and institutional framework to regulate the seed sector and taking measures to support the development of a robust cotton seed industry. Similarly, private sector activities are hampered by the lack of reliable data and analyses, which could feed into sound business decisions. The situation warrants rigorous research to explore the nature and dimensions of the cotton seed provision system in Pakistan.

This study is an effort to fill this gap. It aims to generate data and analysis for use by public and private sectors. The study focuses exclusively on Sindh province, which contributes about 20% in cotton cultivation every year. The province was selected for this study because its seed industry is less developed as compared with the industry in Punjab. Larger firms, which are gradually emerging as reliable seed providers in Pakistan are based in Punjab; and so are the public sector research stations.