The contentious issue of lifting the cap on cotton exports, which has been hanging fire for long, has got further entangled. The Cotton Advisory Board (CAB) has lowered its 2010-11 crop estimate to 31.2 million bales (1 bale = 170 kilogram), from 32.9 million bales estimated in February.
The issue hangs in balance since the agriculture ministry wants the cap on cotton exports, fixed at 5.5 million bales in 2010-11, lifted to help growers; while the textiles ministry argues this will further increase cotton prices in the domestic market.
The advisory board clarified recently that the production estimates had been lowered because of low arrivals in the market. The new estimate is 5.78 per cent more than last year’s production of 29.5 million bales.
The agriculture ministry in the second advanced estimate had projected 2010-2011 cotton production in the country at 33.9 million bales, almost 40 per cent more than last year. Officials said the bone of contention between the textiles and agriculture ministries has been the production and arrival numbers.
“The textile ministry has questioned the very basis of agriculture ministry’s production numbers, arguing that calculations have been wrong, while the agriculture ministry has blamed issues other than price and supplies as being the reason behind the delay in easing the cap on cotton exports,” they said.
Given the trend in demand, textiles ministry officials said, if the cap was lifted now, the total available surplus at the end of the season would be around 1.25 million bales, less than one month’s requirement of cotton. They said if production numbers provided by the agriculture ministry was correct, then there was no reason why prices should rise by so high.
However, officials in the agriculture ministry said their estimate of cotton production in 2010-2011 was correct and arrival numbers are more than CAB’s. “A note for calling a meeting of a group of ministers has been hanging fire for more than 10 days despite no objection from the commerce and other ministries, just because of the adamant attitude of the textiles ministry,” the officials said.
The government had capped exports of cotton for this season, that started in October, at 5.5 million bales. Last year, India exported around 8.3 million bales of cotton, despite lower production. According to the Cotton Corporation of India, price of raw cotton desi variety has jumped by 38 pre cent between January and February.
