Having borne the brunt of low demand from domestic yarn processors, the cotton ginning and processing units are now crying foul over the Cotton Corporation of India’s (CCI) procurement prices.
The MP Cotton Processors and Traders Association has alleged that CCI, the Central Government’s cotton agency, is procuring the commodity at much higher prices of Rs 2,850 a quintal and is getting it processed from some units on a contract basis. This has left the other processors, all of which are SMEs, with no option but to shut down their units.
“The CCI is procuring at Rs 2,850 in Madhya Pradesh. After processing, it is supplying at a lint price of Rs 22,000-23,000 per candy (a bale of 356 kg of processed cotton) to yarn manufacturers. So, we are facing tough competition within the state. Already the US has slashed prices and is dumping its cotton at Rs 19,500 per candy. We cannot survive at this high price. We are at an immediate loss of 10 per cent if we procure cotton at Rs 2,850. The Central government should offer bonus of Rs 300 directly to farmers but slash prices,” said Kailash Agrawal, president of the association.
“As many as 200 units are temporarily closed in Madhya Pradesh due to the hike in minimum support prices and tough competition from CCI. Till yesterday 1.75 lakh bales of cotton arrived in various mandis of the state. The processors cannot lift cotton as prices offered by CCI are very competitive for farmers. We are helpless,” he added.
The Association organised a meeting yesterday and demanded a bonus of Rs 300 a quintal to farmers. “We are not against farmers but this is the way we can survive,” said a processor from Khargone.
However, the CCI said it procured only 15 per cent of the total cotton arrived and the rest has gone to the processors. “We have procured 26,000 bales of the total 1.75 lakh, the rest has been procured by private players. We have tied up with only 46 processors and we are supplying processed cotton at Rs 22,200-22,300 per candy,’’ Atul Kala, branch manager CCI said.
But he admitted that the dull market conditions have created problem for the ginning and pressing mills of Madhya Pradesh since their input cost has risen. Also the problem of plenty has gripped all of them.”
Ginning and pressing mills of Madhya Pradesh which are mainly located in the western Madhya Pradesh have also been turned down by state government on their demand to reduce entry tax to zero on raw cotton from existing rate of 1 per cent.