Allow farmers to make hay while the sun shines

Font Size

Print

Feedback

Email

Discuss

: exports were banned. All these efforts would then yield a negative result as excess supply in the market would drive prices down to such an extent that farm revenues might fall instead of rising.

Exporting cotton has never looked this lucrative; the average global price of cotton jumped from Rs 47 per kg in 2005-06, to Rs 53 per kg in 2007-08, an increase of over 11%. Instead of banning the exports of cotton, we should eliminate intermediaries, thus facilitating larger gains for the farmer from each price rise in the international market. One way of doing this is to promote contract farming, where much needs to be done.

Our opinion is not based on any blind adherence to the principles of free trade. For example, we do advocate a ban on both iron ore and steel exports, given the need for augmentation of domestic supplies. An export ban on steel will bring relief to millions. But in the case of cotton it is the producers and not the consumers who need policy assistance. Continuation of cotton exports makes sense, now that the going is good.

To sum up, we support continuation of cotton exports because the prices from the international trade of cotton are definitely much higher than what farmers would get if they traded domestically. Given that cotton farmers have experienced very low incomes in the not so distant past, we should not remove the provisions for export at the present when international markets are booming. Rather exports should continue but precautionary steps such as a policy of yield insurance and a minimum support price should be combined with a greater spread of irrigation facilities and availability of cheaper inputs to boost productivity. Make hay while the sun shines.