Cabinet okays Rs 17,409 crore to CCI for cotton purchase in seven seasons to 2020-21

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November 11, 2021 3:15 AM

The government has stepped up its purchases of key agricultural commodities in recent years, even as a political slugfest continues over two key farm Bills and the future of official procurement in India.

The textiles secretary said the CCI had to procure a record volume of cotton in 2019-20 and substantial amount in 2020-21 as well, which made up for about 30% of the production, to prevent distress sales by farmers.The textiles secretary said the CCI had to procure a record volume of cotton in 2019-20 and substantial amount in 2020-21 as well, which made up for about 30% of the production, to prevent distress sales by farmers.

The Cabinet Committee on Economic Affairs (CCEA) on Wednesday approved Rs 17,409 crore to reimburse Cotton Corporation of India (CCI) for losses incurred by the state-run agency while undertaking procurement of the fibre between marketing years 2014-15 and 2020-21.

More than 80% of the allocated funds would go into offsetting the losses witnessed in the last two marketing years, when the CCI had to resort to large-scale purchases (a record 1.2 million bales in 2019-20 and 10 million bales in 2020-21) after cotton rates dropped below the minimum support prices (MSPs), textile secretary UP Singh said. Some of the losses incurred in earlier years, too, would be cleared now. About half of the allocated funds will be released this fiscal, while the rest next fiscal.

Singh said the government may not need to procure cotton this marketing year (October-September), as prices of the fibre have shot up well beyond the MSPs, mirroring global trends, following a pick-up in consumption. Still, the state-run agency has made all the arrangements for procurement across 450 centres in producing states should the need arise, he added.

The release of money will bolster the CCI’s financial ability to undertake the MSP operation in future, Singh added.

Ethanol prices hiked
The CCEA also raised the price of ethanol extracted from sugarcane for blending with petrol by up to Rs 1.47 per litre for the 2021-22 marketing year starting December. The move is part of the government’s efforts to realise its target of achieving 20% doping by 2025 from about 8% last year. Higher blending will help India reduce its oil import bill and also benefit cane farmers as well as sugar mills.

The price of ethanol extracted from sugarcane juice has been raised to Rs 63.45 per litre from the current Rs 62.65 per litre for the supply year beginning December 2021. The rate for ethanol from C-heavy molasses has been raised to Rs 46.66 per litre from Rs 45.69 per litre, and that of ethanol from B-heavy to Rs 59.08 per litre from Rs 57.61 per litre.

Jute norms revised
In another decision, the Cabinet approved the new reservation norm for jute packaging materials for the marketing year 2021-22 to support the jute farmers and industry. Under the new norm, 100% of grains and 20% of sugar will be packed in jute bags in the current year under the Jute Packaging Material Act, 1987.It will likely offer relief to 3,70,000 workers employed in jute mills and ancillary units.

Large-scale cotton purchase
The textiles secretary said the CCI had to procure a record volume of cotton in 2019-20 and substantial amount in 2020-21 as well, which made up for about 30% of the production, to prevent distress sales by farmers. Consequently, as much as Rs 55,000 crore was credited into farmers’ accounts directly.

A good harvest and poor export demand in the 2019-20 season kept a lid on domestic prices, forcing the government to intervene in the market to prevent distress sales by farmers, especially up to March 2020. Subsequently, a nation-wide lockdown last year prompted farmers to sell as much as two million bales to the state-run Cotton Corporation of India (CCI) between April and August, even though the peak arrival season was over.

The government has stepped up its purchases of key agricultural commodities in recent years, even as a political slugfest continues over two key farm Bills and the future of official procurement in India.

The Centre has brought in two Bills (they have been kept in abeyance now) to deregulate essential commodity trade and introduce a central law that would enable farmers to sell their produce wherever they like. This proposed law also promises free inter-state movement of farm commodities without any barrier. Farmers, mainly from Punjab and Haryana, have been protesting against the Bills, partly due to fears that they may lead to the abolition of the MSP operations. The government, however, has asserted that it has no intention of doing so.

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