Govt may bail out cotton industry

Written by Commodities Bureau | Agencies | Chandigarh, Rajkot | Updated: Nov 29 2008, 06:30am hrs
The government on Friday, for the first time, indicated that it was willing to consider a bailout package for the domestic cotton industry, which has been reeling under sharp rise in input costs, even as some farmers in Gujarat decided to form a private company on their own to purchase the commodity on behalf of Cotton Corporation of India.

"We will talk to the industry and see if we can do something... Maybe a bailout package for them," Union agriculture secretary T Nanda Kumar told PTI on the sidelines of an exhibition in Chandigarh, organised by the Confederation of Indian Industry, denying that any rollback of the MSP was being considered.

The Centre had, in September, increased significantly the minimum support prices of standard cotton (long staple) to Rs 3,000 per quintal for 2008-09 from Rs 2,030 in the previous year. The MSP of medium staple cotton has been raised to Rs 2,500 from Rs 1,800 per quintal.

The industry has protested strongly against the MSP hike, saying domestic rates will skyrocket at a time when prices in global markets are declining. So much so, that ginners across the country went on a two-day strike from Tuesday and are planning to meet the commerce minister to air their grievance.

India is projected to produce at least 320 lakh bales of cotton in the 2008-09 season.

Meanwhile, undeterred by the rigid stance of the cotton ginners a group of farmers in India's largest cotton growing province of Gujarat have decided to form a private company, under the aegis of Bharatiya Kishan Sangh (BKS), to procure cotton on behalf of Cotton Corporation of India.

The new company to be called the Maha Gujarat Agri Cotton Private Limited (MGACPL) will start with an initial corpus of Rs 10 crore and also plans to enter into processing and ginning at a later date.

The idea behind floating the company is to ensure that benefits of high MSP is available to farmers even in the remotest corner of the country.

MGACPL will open outlets in every taluka of the state to collect cotton from the remotest corner of the state. "Many farmers, especially in talukas away from district, have to sell cotton below the MSP, as the CCI has a presence in selected talukas (in Rajkot, Amreli and Bhavnagar districts), said BKS president Praful Sanjelia. Sanjelia added that the registration process would end in a day or two, and by the end of the week, they hope to complete the procedure to become the purchasing agency of the CCI.