"A proper minimum support price for cotton is crucial to sustain the cotton growers," former minister Sanat Mehta told FE.
The ginners have called for a two-day strike from today in protest against the more than 40% hike in minimum support price by the government to Rs 575 per 20 kilogram and slowdown in export market. Exports are expected to come down to just around 1,50,000 bales as against 1.3 million bales last year because of slump in global markets.
"In such a situation we don't have any other option than to bring down our shutters as the cotton corporation of India is buying raw cotton aggressively from the market," a cotton ginner said.
"There is a disparity between the market price and the minimum support price of the cotton, which has led to difficulties in continuing the ginning units," Mehta said, adding that most of the nearly 1,000 ginning units in Gujarat are operating at 20% capacity.
Industry players said that while the price of cotton has come down to around Rs 22,000 per bale in the international market, the cost of production has increased to around Rs 24,000 because of the higher MSP.
"While a part of any segment may get affected, the entire cotton economy would remain relatively insulated," Mehta added.
On rising cost of production for ginners, Mehta said they could import cotton if they fond the minimum support prices going above their costs.
Proper MSP for cotton is crucial to sustain the cotton growers
Strike in protest against the more than 40% hike in MSP
Exports expected to come down to around 1,50,000 bales compared to 1.3 million bales last year