Under Water: Pakistan Recovers from ‘Monsoon on Steroids’

For Pakistan’s denim mills, the devastating floods that have submerged a third of the country, killed more than 1,700 people and destroyed up to 40 percent of the cotton crop are the least of their problems. 

It’s true that the record-shattering rainfall and heavy glacial melt have wiped out homes, roads, bridges, farmland and livestock, creating additional economic hardships for a population already grappling with ballooning inflation and a collapsing currency. Months after the monsoons began, millions of Pakistanis remain homeless, critical infrastructure is in shambles and hunger is on the rise. Speaking at the COP27 climate conference in Egypt in November, Prime Minister Shehbaz Sharif pegged the destruction at some $30 billion. “Millions of people are going into winter without shelter or livelihood,” he said. 

The impending cotton shortage also augurs ill for the world’s fifth-largest producer of the fiber. In 2021, Pakistan exported $3.4 billion worth of cotton in 2021, making up roughly 6 percent of the global supply, according to United Nations Comtrade data. One report anticipates a deficit of 3.24 million bales valued at roughly $1.53 billion. That leaves just 5.79 million of the 9.03 million bales that the current harvest was poised to deliver.

But waters will recede, communities will rebuild and cotton will regrow, according to mill operators that have avoided the worst of the deluge, which bore down on low-lying areas adjoining the Indus River. Most of the larger manufacturers are stocked up for the next few seasons. The threat they face is more existential: As a cost-of-living crisis due to spiraling food and fuel prices weakens consumer demand in the West, and brands find themselves yoked with too much inventory, orders have fallen precipitously. Without a steady flow of business, suppliers have a harder time riding out shocks, causing a knock-down effect that could leave tens of thousands of jobs hanging in the balance. Smaller outfits, battered by the volatility, have been forced to freeze operations or shutter altogether. 

“When the demand isn’t there, the supply gets affected,” said Umar Khawajah, vice president at Naveena Denim, which has seen a 40 to 50 percent year-over-year drop in orders. “So we pray day and night that the situation gets better in the U.S., Europe and other places so we are able to supply our product.”

Better Cotton, too, said that it will be able to make up any shortfall from Pakistan, its second-largest producer after India, from its partners in Africa, Australia, Brazil and the United States. The London and Geneva-based nonprofit, which promotes cotton production based on a slew of social and environmental criteria, is still assessing its losses, which it originally estimated at 70 percent but has since walked back, saying that it’s still too early to tell. Its biggest priority now is the farmers who bore the brunt of the disaster. 

“We are focusing on their livelihoods,” said Hina Fouiza, the organization’s Pakistan director. This includes working with on-the-ground implementation partners, including CottonConnect Pakistan, the Rural Business Development Center and World Wildlife Fund Pakistan, to find alternative sources of employment for its growers while the soil drains and recovers. Overall, some 1.5 million farmers cultivate cotton, contributing to 0.6 percent of Pakistan’s gross domestic product.

Pakistan was already in financial straits when calamity—a “monsoon on steroids,” as United Nations Secretary-General António Guterres put it—struck. Weighed down by external debt, the cash-strapped nation managed to secure a $1.1 billion loan from the International Monetary Fund to avert a Sri Lanka-like default mere days before the heaviest downpours hit. But Russia’s war in Ukraine, which has driven up energy prices, has continued to deplete its foreign reserves. As of October, they stood at $7.4 billion—enough to cover less than six weeks of imports. Without further debt relief, recovery from the floods will be long and arduous. Already, currency woes have propelled inflation to a historic high of 27 percent.

“We are spending millions of rupees from our own meager resources,” Sharif said as he asked richer countries to provide climate reparations to poorer ones like Pakistan. “How can one expect from us that we will undertake this gigantic task on our own? The gap is humongous; the gap is widening by the day.”

Pakistan’s textile sector, which exports 60 percent of its output, is experiencing its own widening gap as production sputters. “Even a 5 percent drop means a lot to Pakistan,” said Iqbal Sheikh from the Pakistan Textile Council. The “collaboration” part of the relationship with buyers in the West, he noted, has so far been “missing” at a time when support is most needed. 

“If textile exports suffer because of things that are not within our control, that means we’ll have fewer dollars,” Sheikh said. “If you have fewer dollars, the rupee will lose its value and that will cascade into inflation.”

Aid from fashion’s biggest names has been in short supply as well. Ayesha Barenblat, founder and CEO of fashion advocacy group Remake, said that she has “personally written” to every major brand that sources from Pakistan to ask about relief support, only to be met largely with “radio silence.” H&M Foundation, the Swedish retailer’s philanthropic arm, announced in September that it will be directing $250,000 to the International Red Cross and Red Crescent Movement, while Gap Inc. has made an unspecified donation to CARE Pakistan. Wrangler owner Kontoor Brands declined to comment, citing a “quiet period” ahead of its quarterly results. Levi Strauss did not respond to an email requesting information. A source familiar with the situation said that the denim giant was trying to figure things out like everyone else. 

Barenblat isn’t convinced, however. “Remember the brands [that promised] during Covid to provide relief through the ILO Call to Action, which resulted in nothing?” she said. “Their deafening silence during this current crisis in Pakistan speaks volumes of how little they value their supply chain workers.”

But it’s work, rather than charity, that Zaki Saleemi, senior vice president at Crescent Bahuman, would like to see more of. Orders for the mill have tumbled by 30 percent year over year as buyers have pulled back. Customers in Europe are sliding their orders from the first quarter to the second. Others are talking about mid-season price reductions.

“That’s very scary,” Saleemi said. “Mid-season price reductions basically mean everything that I’ve budgeted out from my financial year gets impacted; I hit no targets. Anything in the future I can work toward, let’s say buying cheaply or tightening my belt, but anything that I’ve already budgeted for or planned for? That’s painful.”

Duty relief would be a boon, he said. Preferential trade terms would help stimulate manufacturing in Pakistan, promoting employment. “That helps the situation more so than a handout,” he said. 

The slowdown has made it difficult for manufacturers like Soorty, which invested in capacity building in anticipation of a post-Covid boom, to manage their bills. “No one saw this coming,” said Mansoor Bilal, the company’s vice president of marketing, research and innovation, adding that orders have decreased by 5 to 10 percent. 

Still, he knows that things could have gotten a lot worse. Soorty’s organic cotton pilot in Balochistan, which it launched in April, miraculously escaped the high waters, which means that the close to 1,200 farms involved in the program are still on track to hand over 10,000 bales of cotton next year. “God was kind [to] us and everything is O.K.,” Bilal said.

Bilal said that he understands brands are hurting right now as well. To surmount current conditions, the industry needs to take a “collective approach and a collective effort,” he said. “We all need to work with our heads down together.”

This article appears in the winter issue of Rivet. Click here to download the digital magazine.