1. How Gujarat bonus offer firmed up Maharashtra cotton prices

How Gujarat bonus offer firmed up Maharashtra cotton prices

Cotton prices in Maharashtra have firmed up to Rs 4,600-4,700 per quintal after the Gujarat government announced a bonus of Rs 100 per 20 kg for cotton (Rs 500 per quintal) to be paid to farmers.

By: | Pune | Published: October 26, 2017 3:02 AM
According to Jain, cotton from Khandesh is of superior quality while that from Gujarat is poor in comparison. (Reuters)

Cotton prices in Maharashtra have firmed up to Rs 4,600-4,700 per quintal after the Gujarat government announced a bonus of Rs 100 per 20 kg for cotton (Rs 500 per quintal) to be paid to farmers. The bonus will be paid over and above the minimum support price (MSP) declared by the government. It will be given only to those farmers who sell their crop to Cotton Corporation of India. With traders from Gujarat making a beeline for cotton from Khandesh — the major cotton growing belt in the state — ginners in the region are finding it difficult to get cotton for their units. Most units are barely getting 40% of the installed capacity of cotton and the demand from Gujarat has led to the rise in prices, Pradeep Jain, president, Khandesh Gin/Press Factory Owners Association said. Cotton prices were around Rs 4,400-4,500 per quintal and prices have now risen following the announcement of the Gujarat government, he pointed out.

Since the farmers are finding it more remunerative to sell cotton to traders, ginning units are finding it difficult to source cotton for their units, he said. Gujarat and Khandesh are geographically close and as cotton begins arriving into the markets of Khandesh well before Dussehra, traders from Gujarat find it more remunerative to purchase cotton from this region, industry sources said. According to Jain, cotton from Khandesh is of superior quality while that from Gujarat is poor in comparison. Therefore, traders purchase cotton from Maharashtra and mix it along with cotton from Gujarat to get a better price, he revealed. The association has been demanding a tax on the movement of cotton outside the state without much success, he said. Moreover, traders also end up moistening cotton purchased from Khandesh and since they do not have to pay any VAT or duties, they end up making a profit of nearly Rs 25,000 per truck, he alleged. Around 4,000 to 5,000 quintals of cotton are taken to Gujarat on a daily basis.Maharashtra processes about 80 lakh bales annually and has a capacity of producing 1 crore bales. Around 60,000 labourers are working in cotton factories in the state and majority of the units are located in Marathwada region.

Maharashtra cooperation minister Subhash Deshmukh has directed Agriculture Produce Market Committees ( APMC) to commence online registrations of farmers for the purchase of cotton from October 18 for the cotton season of 2017-18. Cotton MSP has been raised by Rs 160 per quintal to Rs 4,020 per quintal for medium staple cotton and `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. Cotton Corporation of India (CCI) chief MM Chokalingam had said that cotton prices have not reached MSP levels and were at Rs 4,320 per quintal. The total production for the season of 2017-18 is likely to touch 370 lakh bales as against 345 lakh bales for the previous season. As per the agriculture ministry, cotton had been sown on 111.55 lakh hectares till July 28, as against 92.33 lakh hectares witnessed for the same time last year, thereby indicating an increase of close to 21 % acreage.Maharashtra has registered kharif cotton sowing of over 38.47 lakh hectares, while in Gujarat the area stood at 25.84 lakh hectares.

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