With cotton prices firming up at the year-end, the Cotton Corporation of India (CCI) feels it may not be necessary for the agency to procure the fibre for the rest of the season. At the start of the season, CCI had stated that it may procure some 20 lakh bales but with the prices firming up and going up above minimum support price (MSP) levels, top officials said there may be no need for procurement at all.
According to B K Mishra, CMD, CCI, the situation is good as far as prices are concerned and with the Gujarat government announcing a bonus, prices are likely to remain this way for the remaining part of the season. Prices have moved above the MSP (minimum support price) level in most states and farmers are selling to private players, he said.
In a scheme to assist the country’s cotton farmers, the CCI buys raw cotton fibre from them at R4,100 per 100 kg, while in spot markets prices have risen to R4,300 to R4,800. Mishra said a sudden increase in demand from Pakistan and a decision by Gujarat to buy from farmers at levels higher than the MSP boosted prices has reduced the need for state support. “CCI has procured some 7-8 lakh bales so far and the government is likely to spend some R20 billion for the procurement of some 10 lakh bales for the season. This may not be required since farmers are preferring to sell to private traders, he said.Private traders are reported to have procured over 70-75 lakh quintals of cotton in Maharashtra alone this cotton season.
The CCI has not begun sale for the new season as yet, he said adding that the agency still has some 20 lakh bales from the previous season to sell. India has so far contracted 36 lakh bales for exports, including nearly 20 lakh bales to Pakistan. Pakistan’s overall cotton imports have risen to at least 40 lakh bales in the year that started on August 1, from 12 lakh bales in the previous year due to an estimated 25% drop in its own production.India’s cotton exports in the 2015-16 season are expected to rise 18% to 68 lakh bales.
Meanwhile, the Cotton Association of India has estimated production in 2015-16 to fall to 362 lakh bales of 170 kg each from 382.75 lakh bales in 2014-15, a decline of 5.7%.