Cotton Corporation of India (CCI), the nodal agency for government procurement, may not purchase the commodity for its commercial operations this season owing to high domestic prices.
However, CCI would continue to procure on behalf of the government at minimum support prices (MSP).
“We will not conduct commercial operations this year if domestic prices continue to remain firm. Chances of losses are high if we purchase above MSP as it is already high,” CCI Chairman and Managing Director Subhash Grover said.
CCI procures cotton for its commercial operations at the market price, usually above MSP. Of its total procurement of 2.75 million bales (1 bale= 170 kg) last year, commercial purchase accounted for about 80 per cent.
It had earned profit of Rs 22.5 crore last year from commercial operations. It sells cotton in overseas markets on a daily basis apart from supplying to domestic spinning mills. However, it does not sell directly to domestic traders.
Initially, CCI had plans to buy limited quantity for its own trading purpose. However, it has now decided to halt such operations for the time being in view of high domestic rates and falling global prices.
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Cotton prices are ruling high this year following a significant hike in MSP. The support price of standard cotton (long staple) has been raised to Rs 3,000 a quintal from Rs 2,030 last year. The MSP of medium staple cotton has been hiked to Rs 2,500 from Rs 1,800 a quintal.
The CCI has procured 650,000 bales till yesterday, but all in government account, Grover said, adding, bulk of its purchase came from Punjab, Andhra Pradesh, Madhya Pradesh and Maharashtra.