 "Problem of plenty: Govt may intervene in cotton market")
After onion, cotton seems set to become a hot commodity for the government. With the difference that onions were scarce and prices were rising; cotton has a problem of plenty and the price in India has fallen to a 19-month low.
And, cotton is expected to fall further. More important, the prime minister is from Gujarat and his party is facing an election in Maharashtra — both are among the largest cotton growing states.
The crop for the 2013-14 cotton year (October-November) is projected at 40 million bales (170 kg each) by the Cotton Association of India. For 2015-16, CAI believes it could be much higher. Also, exports, 10 mn bales in 2013-14, could fall by 35-50 per cent in 2015-16. All this will cause a problem of plenty.
An industry leader said last year farmers got an average of Rs 5,000 a quintal for kapas (raw cotton). This year, it has already fallen to near the minimum support price (MSP) of Rs 3,900 a quintal for long staple and Rs 3,750 a quintal for medium staple. An industry official said, “Kapas prices are most likely to fall below the MSP as the pressure of arrival increases in the coming days. Arrival of new cotton has already started in the north.”
Farmers say the MSP doesn’t even cover their costs, as wages for farm hands have risen significantly and during an erratic monsoon had many of them re-sowing.
China’s changing policy for cotton is seen as a culprit for the fact that global prices have fallen 25 per cent to a five-year low. The Chinese government is insisting that local mills use more of home-grown cotton and India’s exports have fallen.
Cotton Corporation of India (CCI) has been asked to gear up for procuring if prices fall below the MSP. “We are fully prepared,” said B K Mishra, chairman. In recent years, CCI hasn’t had to do large-scale procurement to support prices. Still, in 2012 it purchased 2.2 mn bales to provide support, mostly in Andhra and Maharashtra. Prior to that, in 2008-09, it procured nine mn bales.
CCI has opened 300 centres for market intervention. The central government is expected to issue a letter of comfort to CCI, to enable easier lines of credit from banks for the funds needed. It is also organising storage capacities. Storing of five mn bales is feasible, said a source.
Sowing happened in two phases. The initial sowing was in June –July and that crop will start arriving from next month. It then picked up from the second half of August and that crop will arrive from November-end. hence, arrivals would be in phases.
And, cotton is expected to fall further. More important, the prime minister is from Gujarat and his party is facing an election in Maharashtra — both are among the largest cotton growing states.
The crop for the 2013-14 cotton year (October-November) is projected at 40 million bales (170 kg each) by the Cotton Association of India. For 2015-16, CAI believes it could be much higher. Also, exports, 10 mn bales in 2013-14, could fall by 35-50 per cent in 2015-16. All this will cause a problem of plenty.
An industry leader said last year farmers got an average of Rs 5,000 a quintal for kapas (raw cotton). This year, it has already fallen to near the minimum support price (MSP) of Rs 3,900 a quintal for long staple and Rs 3,750 a quintal for medium staple. An industry official said, “Kapas prices are most likely to fall below the MSP as the pressure of arrival increases in the coming days. Arrival of new cotton has already started in the north.”
Farmers say the MSP doesn’t even cover their costs, as wages for farm hands have risen significantly and during an erratic monsoon had many of them re-sowing.
China’s changing policy for cotton is seen as a culprit for the fact that global prices have fallen 25 per cent to a five-year low. The Chinese government is insisting that local mills use more of home-grown cotton and India’s exports have fallen.
Cotton Corporation of India (CCI) has been asked to gear up for procuring if prices fall below the MSP. “We are fully prepared,” said B K Mishra, chairman. In recent years, CCI hasn’t had to do large-scale procurement to support prices. Still, in 2012 it purchased 2.2 mn bales to provide support, mostly in Andhra and Maharashtra. Prior to that, in 2008-09, it procured nine mn bales.
CCI has opened 300 centres for market intervention. The central government is expected to issue a letter of comfort to CCI, to enable easier lines of credit from banks for the funds needed. It is also organising storage capacities. Storing of five mn bales is feasible, said a source.
Sowing happened in two phases. The initial sowing was in June –July and that crop will start arriving from next month. It then picked up from the second half of August and that crop will arrive from November-end. hence, arrivals would be in phases.