An expected bumper crop in the cotton season of 2017-18, which commences from October, has the government agencies gearing up for possible procurement operations. According to Cotton Corporation of India (CCI) chief MM Chokalingam, total production for the season is likely to touch 370 lakh bales as against 345 lakh bales for the previous season. This may bring down prices below the minimum support price (MSP) levels which may require intervention from CCI. Prices have dropped to Rs 42,500 per candy from Rs 45,500 per candy earlier. When arrivals begin in full swing in October, prices are likely to fall further, he said. Moreover, in anticipation of a bigger crop, textile mills are not booking cotton in advance as is the normal practice, he said. Accordingly, CCI has directed its centres to prepare for possible procurement operations if needed, he pointed out.
Normally, CCI establishes at least 340 purchase centres across the country. Chokalingam, however was not willing to comment on the amount of purchase that may be required this season. While cotton ginners say at least 50-60% of the crop may be needed to be procured under MSP, some cotton traders say that MSP procurement could be to the tune of 20-25%. Chokalingam said the procurement centres will be all geared up in October and a review will be taken then to ascertain if there is any need for market intervention. Cotton MSP has been raised by Rs 160 per quintal to Rs 4,020 per quintal for medium staple cotton and Rs 4,320 per quintal for long staple cotton.
CCI and Nafed are the two agencies appointed by the government to extend the necessary marketing support to the cotton growers in selling their cotton produce at most competitive prices in the various market yards in all cotton-growing states. These in turn appoint sub- agencies to procure cotton at the local level as well.According to Pradeep Jain, rates are already trading downwards and there is a possibility that prices may fall below Rs 4500 per quintal in December and then cotton purchase may be required because of the good crop. Some international surveys have also pointed that Indian cotton prices may fall and therefore we believe that the government might need to purchase at least 50-60% cotton, he said. He added that the government bodies have already begun preparations for the procurement.