Cotton Corporation of India (CCI) has already crossed its targeted procurement of 60 lakh bales and hopes to obtain more than 75 lakh bales of cotton this year.
Alongside cotton procurement, CCI has already begun sale of cotton and has procured around 15,000 bales in a week so far, BK Mishra, MD, CCI, told FE.
The sale has been receiving a good response since our prices are above the market rates and therefore the cotton is being sold through both the e-auction and conventional means, he said.
Initially, CCI has been targeting a sale of 5,000 bales a day and hopes that it will pick up as the arrivals also increase. At present, prevailing market rates are around Rs 31,500 per candy. Arrivals are expected to peak in the middle of February. Arrivals are increasing from Maharashtra, Gujarat and Andhra Pradesh since the last week.
In response to a query regarding farmers in Tamil Nadu wanting CCI to step in to procure cotton, Mishra said that he has been in touch with the secretary of Tamil Nadu and felt that there is no need to intervene.
The corporation has been targeting a procurement of 60 lakh bales worth Rs 12,000 crore this year as prices in a majority of the cotton growing states in the country have fallen below the MSP announced by the government.
The procurement of the targeted 60 lakh bales so far is the highest since the year 2008-09 when CCI procured around 90 lakh bales of cotton.
This time it could exceed 75 lakh bales. CCI is now present in around 340 centres, and is actively purchasing cotton in about 150 centres. In southern states of Andhra Pradesh and Telangana, the CCI bought about 70-80% of arrivals, while it procured about 10-15% of arrivals in western states of Gujarat and Maharashtra. In view of the large quantity of cotton already procured, CCI has already begun selling cotton form its stocks.
CCI had begun procurement operation at the support price from October 2014 to protect farmers from sharp decline in domestic prices in view of expected higher production.Cotton prices in domestic market are ruling below support price of Rs 4,050 per quintal for last few months.
In global markets, cotton prices have fallen substantially since last spring (March-May), when they were above 90 cents per pound to under 70 cents per pound in December. The International Cotton Advisory Committee (ICAC) in its recent report said that India’s production is expected to remain stable at 6.8 million tonne due to less favourable monsoons and despite an expansion in the cotton acreage by 5% to 12.3 million hectares. However, it’s production will surpass China’s by over 300,000 tons, making it the largest cotton producer in 2014-15.