Pakistan, July 28 -- Cotton industry representatives are demanding a comprehensive audit after alleging that under-invoiced fabric imported under the Export Facilitation Scheme is finding its way into Pakistan's domestic market, undercutting local manufacturers already grappling with collapsing cotton output, volatile prices and rising production costs. At the same time, heavy monsoon rains and the risk of flooding now hang over the standing crop, adding another layer of uncertainty to an industry that has spent years lurching from one crisis to the next.

The controversy over imported fabric, however, is only the visible symptom of a much deeper malaise. Pakistan's cotton crisis did not begin at the customs gate. It began in the fields, ...