Farm ministry gets proactive to check price slump

The agriculture ministry intends to initiate advance measures to support prices of commodities like onions, cotton and oilseeds.

There is concern over a possible price crash in onions as well thanks to good crop, especially in the southern region. A bumper harvest is also likely in cotton and oilseeds in the current kharif.

The immediate worry of the agriculture ministry is cotton - prices have started declining already on the arrival of the new crop in the market.

The production of cotton is estimated by the ministry to be a record of between 19.4 and 20 million bales (of 170 kg each). This the second bumper cotton harvest in a row.

Agriculture secretary Radha Singh has convened a meeting tomorrow at which officials of Cotton Corporation of India (CCI), the textile ministry and other departments concerned will review the emerging cotton scenario and consider steps needed to safeguard interests of cotton growers.

The agriculture ministry wants CCI to purchase cotton in all the major cotton growing states to prevent prices from dropping below the minimum support price level.

These include Punjab, Haryana, Rajasthan, Madhya Pradesh, Maharashtra, Gujarat, Tamil Nadu, Andhra Pradesh and Orissa.

In the case of oilseeds, the area has expanded in the current kharif to 17.6 million hectares from last season's 15.2 million hectares. The condition of the standing crop is also reported to be good.

The agriculture ministry expects the oilseeds output in the current kharif to be around 15.45 million tonnes, some three per cent higher than last season's 15 million tonnes.

The crop weather watch group of the agriculture ministry, which reviewed the crop and prices scenario at its meeting today, expressed apprehensions that oilseed prices might fall below the support price level during the peak marketing season.

The opinion took into account the fact that international prices have softened recently and this might result in higher edible oil imports, adversely impacting domestic prices.

Similarly, in the case of onion, the group warned that prices could fall sharply as a good kharif onion crop was expected. In fact, the prices have already slumped in Chennai and several other markets in southern states.

The agriculture ministry has written to the textile ministry about cotton, underscoring the need for extending effective price support.

The area under cotton in the current cropping season has gone up to around nine million hectares, against last year's 7.8 million hectares. Farmers shifted to cotton as they got good returns from cotton last year when gains were made in both yields and prices.

Global cotton production, too, is projected by the Washington-based International Cotton Advisory body to be around 107.25 million bales (480 lb.), equivalent to 137.28 million Indian bales. This is far above the previous year's output of 122 million bales.

Singh has also referred to the recent trend of large scale import of medium to long staple cotton by the industry on grounds of superior quality.

There is a fear that the textile industry might go in for higher imports this year as well, further depressing domestic prices.

The government has pointed out that there were ample stocks of good quality cotton of higher staple length and spinning count, estimated at about 10.8 million bales.

This was sufficient to meet the industry's projected demand of eight million bales, the ministry noted.

The quality cotton was of locally grown superior varieties like Shankar, H4, MECH, MCU-7, RCH-2, Bunny and others. The other superior varieties of quality cotton include, DCH-32, Suvin, H4 and MECH.