Knowledgeable circles indicate that there may be some drop in the area under desi cotton which may be made up by the increased sowings of American cotton. The fall in area under desi cotton is said to be particularly sharp in Rajasthan. However, a clear picture can be had only by June- end or beginning of July.

Sowings of cotton in areas fed by wells in the central zone have also been in progress since May. Plantings of rainfed cotton in this zone will commence with the onset of monsoon which is expected during the second fortnight of June. In the south zone, major sowings will commence in July-July.

After exhibiting an easy or downtrend until February this year, world cotton prices started looking up fromMarch-April. Cotlook A Index, a measure of the average prices, fluctuated between 55 and 56 US cents (USC) per pound between November 1998 and February 1999. It moved up to 57 USC in March and April and further to 59.9 USC in May 1999. The average index up to May this year from the commencement of 1998-99 season is 59.40 USC.

Although market fundamentals should have led to a still higher index, several contrary factors seem to have kept the prices in check. While the demand is still subdued from East Asian countries, China's imports and exports have been below expectations, exerting some influence on the movement of world cotton prices.

According to the latest release of the International Cotton Advisory Committee (ICAC), world cotton production is projected at 18.264 million tonnes and world cotton consumption at 18.858 million tonnes during 1998-99, both below the 1997-98 levels.

Consequent on world cotton production continuing to lag behind consumption, world stocks of cotton have further tightened -from 9.909 million tonnes in 1997-98 to 9.440 million tonnes in 1998-99.

It is this tightening of stock that has led to an upward movement in prices, although prices are still lower than the levels based on price models developed by ICAC taking into account market fundamentals of demand and supply.

ICAC has projected an increase in both world production and consumption of cotton during 1999-2000. The present estimate of production is 19.09 million tonnes, about 4.5 per cent higher than the level of 18.264 million tonnes estimated for 1998-99. Similarly, the projected consumption for 1999-2000 also.

Consequently, end-season stock is likely to further come down to 9.33 million tonnes in 1999-2000 as against 9.44 million tonnes in 1998-99. The indications, thus, are for world cotton prices to remain steady to firm if these projections hold and if there are no unexpected developments.The increase projected in world cotton production during the coming season is on account of increase in both area andproductivity. World cotton area during 1999-2000 is projected at 33.696 million hectares, as against 33.167 million hectares in 1998-99, while average yield is also expected to register a moderate growth from 551 kg lint per hectare in 1998-99 to 567 kg in 1999-2000.

Coming to the leading countries, ICAC expects China's cotton area to expand slightly from 4.23 million hectares this year to 4.30 million hectares next year. Productivity per hectare in China is projected to register a substantial fall from 1064 kg to 953 kg between this and next year. Resultantly, ICAC expects China to harvest a lower crop of 4.1 million tonnes next year as against 4.5 million tonnes in 1998-99.

The projected scenario in the case of USA is slightly different. USA crop next year is expected to show a rise from 3.05 million tonnes this year to 3.70 million tonnes in 1999-2000 because of a substantial rise in area from 4.21 million hectares to 5.25 million hectares, although there may be a fall in average yield from 725 kg to705 kg.

An analysis made by the Associated Chamber of Commerce and Industry of India (Assocham) is reported to have revealed that despite a succession of good or normal monsoons, average yields of several crops have shown a decline over the years. There appears to have been sizable swings in yield per hectare from 1994-95 onwards in the case of almost all major crops.

For instance, average yield in the case of pulses is reported to have declined by 10 per cent from 635 kg per hectare in 1996-97 to 572 kg in 1997-98. The yield was 552 kg in 1995-96 which was down by 58 kg compared with the yield of 610 kg in 1994-95.

The yield of groundnut reportedly declined from 1027 kg in 1994-95 to 1007 kg in 1995-96. Although the average yield rose to 1138 kg in 1996-97, it fell again to 1078 kg in 1996-98, it is reported. The Assocham analysis seems to have further disclosed that in the case of cereals, the average yield was 1763 kg per hectare in 1994-95 but it declined to 1703 kg in 1995-96. After rising to 1831kg in 1996-97, the yield declined to 1772 kg in 1997-98.

Cotton yields have also shown fluctuation. It was 300 kg in 1994-95 (based on Cotton Advisory Board figures) and climbed to 319 kg in 1995-96 and to 331 kg in 1996-97 but fell to 304 kg in lint per hectare in 1997-98.Moreover, Assocham study reportedly points out that yield levels of crops in India are far lower compared with the world averages. India's range is said to vary from 35 to 98 in the world in terms of yield levels of 12 major crops. It is further stated that domestic agricultural production is more volatile than world production in all major crops. One of the possible causes for this is said to be the relatively low average consumption of fertilisers.

Also, very low proportion of total area is under modern inputs, apart from high dependence on rainfed agriculture. While irrigation facilities are inadequate, the capacity created is also not fully utilised on account of bad management practices, Assocham analysis is reported to havepointed out.Besides, there are massive regional disparities in yield rates, agricultural infrastructure and adoption of modern farming practices.

In order to increase yield levels, Assocham study is said to have emphasised the need for encouraging regional specialisation in crops, development of most appropriate high yielding varieties for different regions, adoption of new technology and providing incentives to make modern inputs more viable to farmers.

(Excerpted from East India's weekly Cotton Statistics & News)