Cotton Seed companies are likely to cut down on the foundation seed production this kharif season following the Centre\u2019s announcement last month to cut seed prices by Rs 60 to Rs 740 per packet for the current year. "Right now the distribution of foundation seeds (parent seeds) is going on. The approach of seed companies now is to reduce production. The exact position will be known only after June end," MG Shembekar, vice president, National Seed Association of India ( NSAI) said on Thursday. Cotton seed producers claim that their production costs have risen by 15-20 % in the past three years, especially since the Bollgard II Bt cotton price was fixed at Rs 800 per packet (450 grams) two years ago. "The main reasons for the production cut are rising production costs, which have gone up by 15-20%, illegal menace of seed sale by the unorganised sector, the pink bollworm attack and approach of farmers towards the cotton crop," Shembekar said. The drop in prices will hurt the industry leaving little margins for growth, he pointed out. "We had requested the government to raise seed prices after two years of stagnation at Rs 800 a packet (of Bolgard II) to accommodate increasing labour cost, fixed and other costs, including the research and development (R&D). Instead, the government reduced the prices.While the cost of production has gone up by nearly 20 % over the last three years, realisation slumped by 7.5 %. This will result into lower production and investment capacity for the next season as the distribution of seed packets for the current season is almost over. The decision of the seed companies to reduce production is also likely to impact investment in the development of new geneplasms and hamper introduction of new seed varieties," Shembekar said. Seed manufacturers normally prepare production and distribution plans of seed packets a year in advance to enable farmers to source high-yielding seed varieties. The producers have to ensure the packet reaches distributors in North Indian states, such as Punjab and Haryana, by March, for early sowing by the month-end. The country usually produces around 4.5 crore seed packets of 450 grams each for around 80-85 lakh farmers to grow cotton in 122-123 lakh hectares annually. The price cut was announced by the government at a time when the seed companies had approached it with proposals to hike prices citing rising cost of production. In an earlier representation to the government, the National Seed Association had requested for enhancement of seed value component of the MSP citing rising cost of production , processing, testing and marketing of seeds. This leads to financial difficulties to the members and reduce investments in R&D, leading to slowdown of development of new hybrids or varieties , decrease in seed production and ultimately shortage of seeds to farmers, Kalyan Goswami, director general, NSAI had stated in the representation. Last season, several farmers in Maharashtra, Andhra Pradesh and Telangana reported huge cotton output loss due to pink bollworm attack on the standing crop. More than one-third of the 42 lakh hectares under cotton in Maharashtra was hit by pink bollworm. Maharashtra requires around 1.6 crore seed packets annually for cotton.