Gujarat cotton farmers unhappy with 14% bonus on support price

Gujarat government's decision to hike minimum support price (MSP) for cotton by nearly 14% has been termed ill-timed by the farmers who were supposed to benefit from it. After losing recent local body elections to Congress in the rural areas, the BJP-led state government announced a bonus of Rs 110 per 20 kg on cotton to appease the farmers.

However, even with the bonus, MSP would be Rs 920 per 20 kg, up to six per cent less than the market price of Rs 950-980. More importantly, the bonus has come late in the day as many farmers sold their cotton in October, the beginning of the season.

The state government's Rs 110 per 20 kg bonus would be above the Centre's MSP of Rs 810 for the cotton year (October-September) 2015-16. Union government had hiked its MSP by Rs 10 per 20 kg this year.

In September, Bharatiya Kisan Sangh (BKS), a farmers' organisation that sympathises with the BJP, had demanded financial assistance for farmers in Gujarat. BKS also feels that the state government's bonus announcement has come late - the needy farmers were forced to sell their produce at lower prices.

"This bonus will not be beneficial for farmers who have already sold cotton at lower prices. It is very untimely and the announcement comes across as only feel good factor," said Vitthal Dudhatra, secretary of Gujarat unit of BKS.

According to Dudhatra, small farmers sold cotton at Rs 800-875 per 20 kg in the past two months. "The bonus should have been announced in October when farmers actually needed support. Currently, market prices are higher than the MSP," he said.

According to industry sources, 40 per cent of the season's crop has already arrived in the market. Those who have holding capacity are expecting Rs 1,100 per 20 kg for raw cotton as there is a fear of crop damage due to pest.

"Cotton production in the state was expected to be about nine million bales, but in current scenario it will be around 7.5 million bales. Prices are not likely to go below Rs 950 this season," said Arvind Pan, managing director of Jaydeep Cotton Fibre.

Gujarat government will pay the bonus only on Cotton Corporation of India (CCI) procurement. Due to low MSP, the state-owned CCI has procured only 5,000 bales this year. Last year, CCI had purchased about 650,000 bales cotton from Gujarat.

"Small farmers want to be paid soon after harvesting as they have to pay their bills including that for seeds and pesticides. However, CCI only procures cotton when prices go below MSP. When the market price is higher than MSP, why would CCI procure cotton? The bonus announcement seems futile," Dudhatra added.