Afghanistan Cotton & Derivatives Market- Trend Analysis & Forecasts

Market/ Product Overview

Afghanistan’s raw cotton market represents one of the country’s historically important agricultural pillars, accounting for nearly 6–7% of total agricultural GDP in recent years and supporting more than 700,000 rural livelihoods across provinces such as Kunduz, Balkh, Baghlan, Faryab, and Helmand. In 2024, Afghanistan’s total cotton output was estimated at ** tonnes, marking a slight recovery of around 3% year-on-year following improved farm-gate prices that averaged AFN 62–67 per kg, compared with AFN 55–58 per kg in 2022. Cotton derivatives, including lint, cottonseed, hulls, and cottonseed oil, generated a combined domestic market value of US$ ** million in 2023, reflecting demand from both local oil processors and regional textile importers.

The sector remains predominantly smallholder-driven, with more than 85% of farms cultivating cotton on less than 2 hectares, resulting in relatively low mechanization levels and average yields of just 1.2–1.4 tons per hectare, significantly below the global average of 2.2–2.5 tons per hectare. Despite these constraints, cotton remains one of Afghanistan’s top five agricultural export commodities, with lint exports reaching an estimated 22,000–26,000 tons in 2023, primarily to Pakistan, where strong mill demand pushed export prices upward to around US$ 1,450–1,520 per ton.

Domestic ginning capacity continues to operate below potential, with fewer than 30 active ginneries functioning at more than 50% utilization, limiting the domestic value-added potential. Nevertheless, increased interest from regional traders and a rise in cottonseed oil consumption—estimated at ** tonnes in 2024—signals gradual market stabilization. As geopolitical and economic conditions evolve, Afghanistan’s cotton market is projected to expand steadily toward a valuation of US$ ** million by 2032, underpinned by growing export-oriented production and regional textile demand.

Significance of Afghanistan in Global Cotton & Derivatives Supply Chain

Although Afghanistan represents less than 1% of global cotton production, its geographic proximity to major textile hubs gives it strategic weight within the regional supply chain. The country supplies an estimated ** thousand tonnes of lint annually to Pakistan, a market that processes more than 11 million bales of cotton each year, making Afghan lint particularly important during seasonal shortages when Pakistan’s domestic yield falls below its spinning requirement by 3–4 million bales. This recurrent deficit has positioned Afghanistan as a reliable bridging supplier, with Afghan cotton often commanding a US$ 20–30 per ton premium during peak demand months due to its longer staple length averaging 27–29 mm.

In the edible oils and animal feed segment, Afghanistan’s cottonseed output—estimated at ** thousand tonnes annually—contributes to regional trade in cottonseed oil and cottonseed meal. Cottonseed oil imports into neighboring countries such as Pakistan exceed US$ ** million annually, and Afghan-origin cottonseed oil—produced at a cost of US$ ** per ton—remains competitive against global prices ranging from US$ 850–900 per ton in 2024. Similarly, Afghan cottonseed meal, valued at US$ ** per ton, supports feed mills in Central Asian markets where demand continues to grow at 4–5% annually.

Afghanistan’s strategic relevance is further strengthened by its low production costs, with average cultivation expenses of US$ 450–520 per hectare, compared to US$ 1,100–1,200 per hectare in major producing countries like the U.S. and China. This cost advantage, combined with tariff-free or low-tariff access to key regional markets, reinforces Afghanistan’s position as an influential, though niche, supplier in the global cotton and derivatives value chain.

Afghanistan Cotton & Derivatives Supply & Demand Trend

Afghanistan’s cotton supply chain has been rebuilding after years of volatility, with raw cotton output stabilizing around ** thousand tonnes between 2022 and 2024, supported by improved weather, higher farm-gate prices, and renewed private-sector procurement. Supply remains highly concentrated in northern provinces, where Kunduz alone contributes nearly 22–25% of national output, while Balkh, Baghlan, and Faryab collectively account for another 40–45%. Average cottonseed-to-lint conversion yields remain in the range of 32–34%, slightly lower than regional averages of 36–38%, reflecting technological gaps in the country’s ginning facilities.

On the demand side, Afghanistan consumes only about 25–30% of its cotton lint domestically because the country’s textile capacity remains minimal, with fewer than 10 small-scale mills operating consistently. Domestic demand for lint is estimated at 12,000–14,000 tons in 2024, primarily for basic weaving and value-added processing, while the remaining ** thousand tonnes is exported mainly to Pakistan, India, and, increasingly, Uzbekistan. Cottonseed demand, however, is rising more rapidly as vegetable oil consumption climbs at 4–6% annually, with Afghanistan relying on more than US$ 300 million in edible oil imports each year. As a result, local oil processors have increased their procurement of cottonseed, pushing cottonseed prices to AFN 17–20 per kg in 2024, compared with AFN 14–15 per kg in 2022.

With estimated domestic consumption of cottonseed oil at ** thousand tonnes, rising demand is expected to outpace supply growth, generating opportunities for investments in ginning, crushing, and refining. By 2032, national cotton demand is projected to rise by 40–45%, driven by expanding export commitments and higher derivative utilization, positioning Afghanistan as a crucial raw material node for neighboring textile and oil-processing industries.

Afghanistan Cotton & Derivatives Market Growth Factors

Afghanistan Cotton & Derivatives Market Segmentation

The Afghanistan raw cotton and derivatives market is segmented by product type, processing level, end-use industry, and regional distribution.

By product type, lint remains the most valuable segment, accounting for nearly **% of total cotton revenue due to export demand from Pakistan and India, where textile mills collectively import more than US$ ** billion worth of cotton annually. Afghan lint exports, averaging ** thousand tonnes, are priced between US$ 1,450–1,520 per ton, making lint the dominant contributor to foreign exchange earnings. Cottonseed forms the second-largest segment with ** thousand tonnes of annual production, generating around US$ ** million, supported by growing oil extraction needs.

Cottonseed oil represents a fast-growing derivative segment, with domestic consumption estimated at ** thousand tonnes and increasing at 4–6% annually due to rising household demand for economical edible oils. Processed cottonseed oil is currently priced between US$ 720–780 per ton, significantly lower than global edible oil alternatives such as sunflower oil, which traded at US$ 900–1,000 per ton in 2024, thereby supporting stronger demand in Afghanistan’s urban centers. Cottonseed meal, another key derivative, serves the regional livestock and poultry feed market valued at US$ ** billion. Afghan cottonseed meal production of ** thousand tonnes annually supports both domestic dairies and export channels into Pakistan, where feed mills absorb more than US$ ** million worth of protein meals each year.

Segmentation by processing level highlights Afghanistan’s heavy dependence on primary processing, with more than **% of cotton exported as raw lint or unrefined derivatives. The underdeveloped textile segment, operating at less than **% of potential capacity, accounts for only ** thousand tonnes of domestic lint consumption. By end-use industry, textiles dominate with around **% share, followed by edible oil processors at **%, and feed manufacturers at 10–12%.

Regionally, the northern provinces—Kunduz, Balkh, Baghlan, Faryab, and Takhar—collectively contribute nearly 70% of total cotton output, while western regions like Herat account for **%, supported by cross-border trade routes with Iran. This segmentation structure underscores the importance of expanding downstream processing capacity to unlock an additional US$ ** million in domestic value-add potential by 2032.

Afghanistan Cotton & Derivatives Trade (Export & Import) Trend

Afghanistan’s cotton trade dynamics are closely tied to regional textile and edible oil markets. Cotton lint remains a critical export commodity, generating US$ ** million annually depending on price cycles and export volumes. In 2023–24, lint exports reached an estimated ** thousand tonnes, with Pakistan serving as the dominant destination, absorbing nearly **% of Afghan cotton shipments. Pakistan’s textile mills, which process more than 11 million bales annually, rely on Afghan lint to bridge their domestic production deficit, which widened to 4.5 million bales in 2024, thereby strengthening bilateral trade flows.

India has emerged as a secondary destination, importing ** thousand tonnes of Afghan cotton during high domestic demand periods when Indian mills process close to 5.5–6 million tons of cotton fibre annually. Uzbekistan is also increasing imports, particularly cottonseed and cottonseed meal, as its feed industry expands at 4–5% CAGR. Export prices from Afghanistan averaged US$ 1,450–1,520 per ton for lint and US$ 280–310 per ton for cottonseed meal in 2024.

On the import side, Afghanistan brings in limited quantities of high-quality textile machinery and refined edible oils, with edible oil imports alone valued at US$ ** million annually. Cottonseed oil imports have declined gradually as domestic crushing capacity improved to **% utilization, reducing reliance on foreign suppliers.

Tariff structures remain favorable for Afghan exporters, as Pakistan maintains low or zero-tariff concessions on Afghan cotton under bilateral arrangements, effectively reducing transaction costs by US$ 20–25 per ton. Similarly, trade corridors through Uzbekistan and Iran provide competitive transit fees ranging from US$ 10–15 per ton, ensuring Afghanistan maintains cost advantages in regional cotton commerce. Trade dynamics are expected to strengthen as regional markets prioritize short-haul, lower-cost sourcing to hedge against global price volatility.

Influence of Afghanistan in Global Cotton & Derivatives Price

Afghanistan contributes less than 1% of global cotton output, yet it plays an important regional pricing role, especially when Pakistan’s production drops from its usual 4.5–7.0 million bales. In 2023, a 1.2-million-bale shortfall in Pakistan pushed Afghan lint exports up by 12–14%, helping soften spot prices that had risen to PKR 17,000–18,200 per maund. Afghan lint, priced at USD 1,450–1,520 per ton—about USD 30–50 below global benchmarks—regularly exerts downward pressure on South Asian markets, reducing wholesale prices in Khyber Pakhtunkhwa by 2–3% between 2022 and 2024. Rising transport costs from US$ 30 to US$ 45 per ton have influenced export pricing, while Afghan cottonseed oil at US$ 720–780 per ton continues to stabilize edible oil markets. Although Afghanistan cannot move global indices, its low-cost supply significantly shapes seasonal prices across South and Central Asia during shortages or global volatility.

Market Competitive Landscape

Future Outlook

The Afghanistan raw cotton and derivatives market is set for steady growth through 2032, with market value rising from US$ ** million in 2023 to US$ ** million by 2032 at a CAGR of **%. Production is forecast to increase from ** thousand tonnes in 2024 to ** thousand tonnes as yields improve and planted area expands by **%. Lint exports are expected to grow from ** thousand tonnes to ** thousand tonnes as Pakistan continues to face a 3–4 million-bale supply gap, while cottonseed oil demand is projected to rise from ** thousand tonnes to ** thousand tonnes. With cottonseed meal exports likely to expand by 20–25%, reforms such as modernizing 25–30 ginneries and adopting certified seeds could lift yields by 20–25% and cut wastage below 4%. Despite logistical and geopolitical hurdles, Afghanistan’s low costs and strengthening regional trade corridors support sustained sectoral growth to 2032.