Procurement of cotton hits halfway mark

By: |
Pune | January 02, 2015 1:57 AM

CCI procures 3.6 million bales...

Cotton Corporation of India (CCI) has procured around 3.6 million bales of cotton till date, reaching its halfway target for procurement this season. CCI is targeting procurement of 6 million bales worth Rs 12,000 crore this year, as prices in a majority of cotton growing states have fallen below the MSP announced by the government, BK Mishra, MD, of CCI,  told FE.

Procurement of the targeted 6 million bales so far is the highest since 2008-09 when CCI procured around 9 million bales. “Arrivals are picking up in the central parts and more farmers are coming forward to sell cotton in Telangana, Andhra Pradesh and Maharashtra.In Gujarat around 48 of 63 procurement centres are active. However, quantities are feeble in Rajasthan and Madhya Pradesh where good quality crop has exhausted. In the north as well, arrivals are down and farmers are holding onto their crop in hope of better price,” he said. In Punjab and Haryana, limited quantities of cotton are coming into the market, he added. CCI has planned around 341 centres for procurement this season.

Last year, the corporation procured Rs 80 crore worth of cotton. For the season of 2012-13, it procured cotton only from Andhra Pradesh and there was no reason for procurement in the season prior to this year, he said.

The CCI procured a record Rs 14,000 crore worth of cotton in the season of 2008-09 when it purchased 90 lakh bales. For the procurement of Rs 12,000 crore this year. the corporation has made arrangements with a consortium of 14 banks led by Bank of Baroda, for fundraising.

The CCI is expected to buy 60 lakh bales (of 170 kg each) across Telangana, Andhra Pradesh, Madhya Pradesh and Maharashtra. Currently, it has an inventory of eight lakh bales. The government has fixed an MSP of Rs 3,750 a quintal for medium staple cotton and Rs 4,050 for long staple cotton for the 2014-15 season.

Cotton Association of India (CAI) estimates output at 40.55 million bales this year, a marginal decline from 40.73 million last year (this is an October-September year). Of that, CCI plans to buy six million bales from the open market.

During the current cotton season, 2014-15, prices are currently ruling at below MSP in major cotton growing states. The price of cotton in the domestic market depends on a number of factors, including previous balance, current supply and current as well as future demand in both domestic and international markets.

At present, cotton prices in international markets are ruling lower than the prices that prevailed in the same period last year, primarily due to lower demand by China and increased supply from the US.

According to the ministry of agriculture, cotton has been planted on 12.6 million hectares this season, which is 7.7% higher than 11.7 million hectares planted in the previous season. As a result, cotton output  is likely to remain above 40 million bales in the ongoing season.

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