1. India’s cotton story not so dandy

India’s cotton story not so dandy

India has beaten China for the first time to become the world’s largest cotton producer in the 2014-15 marketing year, and the gap in production with the neighbour is set to widen considerably in 2015-16, reports Banikinkar Pattanayak in New Delhi.

By: | New Delhi | Updated: October 5, 2015 8:05 PM
bt cotton in india

In India, the cotton marketing year runs from October through September.

India has beaten China for the first time to become the world’s largest cotton producer in the 2014-15 marketing year, and the gap in production with the neighbour is set to widen considerably in 2015-16, reports Banikinkar Pattanayak in New Delhi.

According to latest estimates from the International Cotton Advisory Committee (ICAC), India produced 6.5 million tonnes (mt) of cotton in 2014-15 against China’s 6.4 mt. However, since China has been reducing the area under the crop consistently, its production could go down further to just 5.4 mt in 2015-16, compared with 6.4 mt in India, the ICAC has forecast.

cotton-story

So despite a projected 2% decline in India’s output in 2015-16 from a year earlier, thanks to a deficient monsoon, the country’s share in the global cotton production is set to rise to 27% from almost 25% in 2014-15. In India, the cotton marketing year runs from October through September.

But surplus local production in 2015-16 despite a deficient monsoon could worsen a domestic glut and further dent local prices, as exports have plunged.

According to the Cotton Association Of India (CAI), a traders’ body, exports of cotton may remain negligible in 2015-16, compared with 6 million bales in 2014-15, thanks to a massive fall in purchases by China, which typically accounted for over 70% of India’s outbound shipments of the fibre. One bale equals 170 kg. Despite surplus output, India is projected to import roughly 1.2 million bales of cotton in 2015-16 — the same as 2014-15 — mostly of some varieties that are not produced in the country.

However, higher output doesn’t mask the stark reality that India’s cotton yield is just above a third of China’s and much lower than the global average. The massive plunge in China’s cotton production has not been caused by any fall in yield but by a sharp drop in areas under under the crop, as the government there has been offloading stocks from its huge reserves and also trimming subsidy support to cotton farmers for over a year now. China, the world’s largest cotton consumer as well as importer, has been attempting to move away from labour-intensive sectors like garments to more capital-intensive ones, as wage costs have been soaring.

This brings to the fore the moot point that despite the introduction of the Bt cotton in the country more than a decade ago, which catapulted the productivity level from just 302 kg per hectare in 2002-03, a lot still needs to be done to catch up with China.

Tags: Cotton
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