Tamil Nadu mills want cotton body to begin MSP operations

By: | Published: January 15, 2015 12:09 AM

The Southern India Mills' Association (SIMA), the largest spinning mills association in India...

The Southern India Mills’ Association (SIMA), the largest spinning mills association in India, has asked the Centre to direct Cotton Corporation of India (CCI) to start its commercial operations in Tamil Nadu.

With Tamil Nadu one of the lowest cotton producing states, CCI has not undertaken any commercial or MSP operations in the last 20 years. But this year, Tamil Nadu is likely to produce five lakh bales during winter season and one lakh bales in the ensuing summer season. Moreover, the current market prices of kapas (seed cotton) rule much lower than the MSP operations and the arrivals are likely to pick up soon.

According to SIMA chairman T Rajkumar, Tamil Nadu government has allocated R50 crore to establish a Cotton Cultivation Mission to increase the production from current level of 6 lakh bales to 30 lakh bales and the government has involved the association in implementing the programme jointly across the state.

Tamil Nadu is also preparing itself to increase the cotton production, necessary steps to be taken to retain the existing area under cotton. Though the country is likely to export around 90 lakh bales during the current season and consume around 300 lakh bales leaving a safer closing stock, the international cotton scenario and Chinese cotton policy are the worrying factors for the cotton community.

Rajkumar said that the cotton prices were highly volatile during the last five years due to various factors. However, if India continues to increase its production during the current cotton season it would become the largest cotton producing country in the world and is likely to achieve a record high production of over 400 lakh bales.

China, the largest cotton consumer and importer in the world, influences the international cotton prices. In order to deplete its high cost cotton amounting to almost two years stock during February 2014, it came out with the new Cotton Policy, restricting imports to 25% of the consumption and also extending over 25% subsidy for the reserve cotton.

This has seriously affected the international cotton price and from August 2014 onwards, the New York Futures remain below 70 cents as against the normal rate of over 90 cents, the SIMA chairman pointed out.

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