The government targets to procure a record 11 million bales of cotton in the current marketing year through September, as it ramps up efforts to ensure farmers don’t resort to distress sales.
The Cabinet Committee on Economic Affairs gave its ex-post facto approval on Wednesday for engaging the Maharashtra State Co-operative Cotton Growers Marketing Federation (MSCCGMFL) to undertake procurement operations as a sub-agent of the state-run Cotton Corporation of India (CCI) in the current year.
While the CCI is expected to procure 10 million bales in 2014-15, MSCCGMFL would purchase one million bales, according to an official statement. MSCCGMFL will help CCI in cotton procurement in Maharashtra. One bale equals 170 kg.
“This operation is primarily aimed at safeguarding the interest of the farmers and avoiding any distress sale,” a release said.
Plentiful supplies and poor export demand had driven down cotton rates below the benchmark prices earlier in the season. However, the situation has largely improved due to procurement operations by the CCI, which has so far mopped up 8.7 million bales, just short of the record 8.9 million bales it had purchased in 2008-09.
Although procurement at the minimum support prices has been halted by the CCI in the recent weeks due to an uptick in prices, some amount of cotton can still be procured from select parts of Maharashtra, said a senior government official.
The CCI procures cotton from farmers at the MSP and sells the stocks in the market later. Any losses out of the procurement operation is reimbursed by the government.