Cotton procurement may plummet to 30-40 lakh bales next season: CCI

By: | Published: September 29, 2015 12:15 AM

With the likliehood of another bumper crop in the coming season that could weaken prices yet again, Cotton Corporation of India...

With the likliehood of another bumper crop in the coming season that could weaken prices yet again, Cotton Corporation of India (CCI) has begun preparing for another year of minimum support price (MSP) operations. This time, however, the agency feels that the quantum of cotton under MSP could go down to 30-40 lakh bales, top officials of CCI said. In the  2014-15 season, CCI had purchased 87 lakh bales.

“The prices of cotton seeds are much better than last year. Moreover, the carryover stock with CCI from 2014-15 is to the tune of 19 lakh bales.These will have to be liquidated before we go in for MSP operations. CCI, however, has begun preparing for MSP purchase this year as well in the 11 cotton growing states and has set into motion the tendering process as well which should be completed by the month end,” BK Mishra, CMD, CCI told FE.

As in the previous year, CCI will set up 300 purchase centres this year as well. Mishra felt that market intervention by CCI may not be required to a great extent since market prices may not fall beyond the support price. Cotton prices are currently in the region of Rs 32,000 to Rs 34,000 per candy.

Last year, China had played a major role in determining the MSP operations in the country when it decided to stop cotton imports. This led to a huge stock of cotton in India that led to weakening of prices, which in turn resulted in the need for market intervention. Indian cotton production touched 400 lakh  bales in the 2014-15 season.

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, though  it didn’t have to do large-scale procurement to support prices.

This time, CCI has urged the government to appoint more agencies for cotton procurement so that it could ease pressure on the corporation.  In Maharashtra, the Maharashtra State Cotton Growers Federation was the sub-agency of CCI last year. This time, CCI wants similar agencies in  states such as Telangana and Andhra Pradesh as well. CCI has written to the Ministry of Agriculture to appoint Nafed as well as other agencies in different states. Last year, CCI had procured Rs 16,000-crore worth cotton from farmers incurring losses to the tune of Rs 2,700 crore. Cotton seed prices are currently in the range of Rs 2000 per quintal and should the prices go below Rs 1500-1600 per quintal, MSP may be required, Mishra said.

The acreage under cotton is likely to be 5-8% less than last year and the output is likely to touch 350-380 lakh bales.

The first estimates given out by the Ministry of Agriculture say that cotton output is likely to touch 335 lakh bales this season.

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