There is a marked slowness in the coutry’s ongoing cotton procurement, as growers are expecting an increase in price after the partial lifting of a ban on cotton exports 10 days ago.
The growers of the crop from Andhra Pradesh, Maharashtra, Gujarat and northern states have adopted a wait-and-watch policy, as they expect a spur in the prices of produce, besides further exports.
Raw cotton is currently sold at Rs 3,700-3,900 (per quintal) in Maharashtra, at Rs 3,500 in Andhra Pradesh and at Rs 4,000 in Gujarat.
The Maharashtra State Cooperative Cotton Growers’ Marketing Federation said the procurement was low in cotton-growing regions of that state as farmers expect raw cotton price to be at upwards of Rs 4,000 per quintal. “Besides, they do not want to take a chance knowing well that ginners and exporters are facing financial problems, especially in the wake of the Central government’s flip-flop over the ban on cotton exports,” a senior official with the federation told Business Standard.
He, however, ruled out any possibility of cotton prices reaching minimum support price (MSP) of Rs 3,300 per quintal in Maharashtra.
As for the procurement, state-run Cotton Corporation of India (CCI) also confirmed the process had by far been slow. “CCI is mandated to intervene when the cotton prices reach the MSP level,” according to an official with the corporation. “As of today, the prices are in the range of Rs 3,500 to Rs 4,000 per quintal. We will keep a watch and accordingly take a decision.”
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However, the Cotton Association of India (CAI) has called upon the central government to make export of cotton free under open general licence without any quantitative and other restrictions with immediate effect in the interests of the Indian cotton economy in general and that of the farmers in particular. CAI president Dhiren Sheth, who has dashed off a letter to the Prime Minister, said the March 12 notification does not allow fresh quantities to be registered for export and issue of new egistration certificates would continue to remain suspended.
"This amounts to ban on cotton export continuing. This will lead to several international disputes and arbitration along with huge claims to be faced by those exporters who have contracted for substantial quantities but not registered them withi directorate general of free trade. Indian exporters are alredy facing such claims because of the events on the previous years," Sheth added.
According to Sheth, about one crore bales valued at Rs 20,000 crore are still in the farmers hand and they are yet to arrive in the market. Due to fall in prices as a result of ban, loss to the farmers is estimated at Rs 2,000 crore and more. "If prices continue to drop in absence of domestic mill buying, the loss to the farmers is expected to increase sharply," he noted.
Further, Sheth said the suspenstion of further export would also hit the ginners hard as they would have to resort to distress sale of around 15-20 lakh bales still held by them. Exports holding stocks of committed quantities would also resort to distress sales leading to further dampening of prices in an already depressed scenario, he added.