Junagadh Agriculture University (JAU) has recommended farmers not to stock cotton crop during current season as cotton price is expected to remain under pressure due to high production estimates.
According to research team of department of agricultural economics, JAU, cotton production in India this year is likely to remain about 36.1 million bales (each bale of 170 kg each lint) as against 33.4 million bales last year (as per the fourth advance estimate).
All major cotton producing states like Gujarat, Maharashtra, Andhra Pradesh and Madhya Pradesh will see a rise in cotton production with increased area under cotton and better weather condition compared to last year.
Researchers took into consideration factors like export demand and domestic market. Meanwhile, with cotton export allowed under open general license (OGL), about 9 million bales of cotton is expected to be exported from India as against 7.5 million bales last year. The domestic consumption is expected to remain at about 27.5 million bales leaving a large year-ending stock in India and at global level too.
"We had considered all national and international factors of cotton market, estimated production and demand for current cotton year, hence we recommended farmers not to stock cotton. However, it is farmers, who have to decide what they want to do with their crop," said R N Siyani, head of department of agricultural economics, JAU.
The research team of department of agricultural economics of JAU also analysed the historical monthly price data of cotton collected from Rajkot and Gondal agricultural produce marketing committees (APMCs).
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The econometric analysis of cotton price showed that prices may remain low during current cotton year. As per the estimate prepared in consultation with organisations like National Agricultural Innovation Project, Domestic and Export Market Intelligence Cell, Tamil Nadu Agricultural University, Coimbatore, the price of cotton during November, 2011 to February, 2012 may remain in the range of Rs 700 to 900 per 20 kg.
Report hinted farmers not to stock cotton crop as they are presently getting more prices than minimum support prices (MSP). The government has fixed cotton MSP at Rs 660 per 20 kg while cotton is currently ruling at around Rs 900-950 per 20 kg.
As per the International Cotton Advisory Committee (ICAC) report, the global cotton (lint) production is expected to rise by 8 per cent to 26.9 million tonnes (2011-12), the largest crop since 2004-05. The global utilization by textile mills is expected to increase to the extent of 2 per cent or about 25 million tonnes.