The Cotton Corporation of India (CCI) has opened around 120 purchase centres across the country even as it has no plans at the moment to procure the fibre, senior officials of CCI said. Cotton prices are currently ruling at R5,000- R5,500 per quintal while the MSP is R4,160 per quintal.
MM Chokalingam, director-marketing, CCI, told FE that the agency is not going in for MSP operations now since the market prices are much higher. The government has asked the agency to open purchase centres. Normally, CCI establishes 340 procurement centres every year.
Chokalingam expects arrivals to peak during November-December and says the rates are likely to come down then. CCI shall then assess the situation and accordingly may go in for commercial operations, he said. According to market sources, the central ministry has also indicated that the government would intervene if the prices fall below MSP at any point of time.
In Maharashtra, the Maharashtra State Cooperative Cotton Growers Federation (MSCCGF) is also in a state of readiness to begin cotton procurement if required. The agency has received permission from the state government to be able to commence procurement operations in case the cotton prices fall below MSP from November 15.
At present the arrivals are around 10 lakh bales a month and it is expected to go up to 40 lakh bales a month. The monthly consumption is around 25 lakh bales. Exports do not look very attractive since the domestic and international rates are on par, Chokalingam said. November-December is when the government may take a call on exports, he said.
Last year, Pakistan had imported some 20 lakh bales from India. At the moment, exports to Pakistan seem to be a dim prospect. Industry experts feel that if the exports do not happen and there are heavy arrivals in the market this may put some pressure on prices.
Meanwhile, MSCCGF has decided to get ready for MSP from November 15. There are less chances of procurement but this measure is to ensure that farmers get good prices, NP Hirani, chairman of the federation, told FE.
The federation has also urged the state government to give a bonus of R2,000 per quintal in case prices fall below MSP. Last year Gujarat had declared a similar bonus. Hirani said that market rates are on the higher side and therefore at the AGM of the federation a resolution was passed to seek a bonus from the state government for cotton growers this year since the MSP rates have already been declared.
The federation is prepared to establish some 70 procurement centres across the cotton-growing regions of the state. The federation had established 82 purchase centres last year.
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.
This season, according to estimates, India is likely to produce some 335 lakh bales while Maharashtra alone is expected to produce some 71 lakh bales. As per latest estimate by the government, cotton is planted in 102 lakh hectares in the country as against 118 lakh hectares last year.