Amid demand by the textile industry for immediate cotton sales in large volumes from government reserves to correct an “artificial shortage” in the market created by the state-run procurement agency, Cotton Corporation of India chairman BK Mishra has insisted there is no scarcity of the fibre in the domestic market.
Still the agency has started selling 40,000-50,000 bales of the fibre on a daily basis and interested mills can buy from it, he added.
“That the market is facing a shortage of cotton is a misnomer. While India is expecting a bumper harvest of 40 million bales in the current year through September, as estimated by the Cotton Advisory Board, exports have crashed due to a slowdown in top buyer China, so there is ample cotton available in the domestic market,” Mishra said. One bale equals 170 kg.
According to the CAB estimates in November, cotton consumption by mills would touch 31.1 million bales in 2014-15, while total availability of cotton in the domestic market — including expected production, imports of certain varieties of cotton (0.7 million bales) and stocks (3.2 million bales) carried from the last year — are estimated at 43.90 million bales. Mishra said since exports are expected to have been to the tune of 3.5-4 million bales and procurement by the agency has been slightly less than 8.7 million bales, there are still plentiful supplies available in the market for consumption by textile mills.
The state-run agency has so far procured around 8.7 million bales of cotton from farmers — just a tad short from the record 8.9 million bales of purchases in 2008-09. Of the procured cotton this year, the CCI has already sold 0.46 million bales. “Depending upon demand from mills, we will put the stocks on sales. We have done our social responsibility by preventing distress sales by farmers, and now all we want to ensure is how to reduce the cost burden of the MSP operation on the exchequer,” Mishra said.
CCI procures cotton from farmers at the MSP to avoid distress sales by them and sells the stocks in the market later. Any losses out of the procurement operation is reimbursed by the government.
Last week, in a letter to textile minister Santosh Kumar Gangwar, Confederation Of Indian Textile Industry chairman Prem Malik said: “In some states like Andhra Pradesh, Telengana and Maharashtra, the CCI has bought large quantities through MSP operations…. There is a shortage of cotton in these states at present and the local mills are forced to get cotton from distant places, incurring additional transportation and other costs.”
Malik had said holding of huge stocks by the CCI are pushing up the prices and private traders are taking advantage of the situation because of “the perception that non-disposal of cotton by the CCI would drive up the fibre rates even further. Separately, RK Dalmia, chairman of the Cotton Textiles Export Promotion Council, had demanded that the CCI sell at least 50,000 bales per day for a period of 100 days through e-auction directly to the actual users.
Prices of cotton (ICS-105, 29 mm) in Gujarat have risen to R33,300 per candy of 356 kg, up from R33,100 in the beginning of January.
Allegation
* CCI, the state-run agency, has so far procured around 8.7 million bales of cotton from farmers
* Confederation of Indian Textile Industry says holding of huge stocks by CCI is pushing up the prices and private traders are taking advantage of the situation
* Cotton Textiles Export Promotion Council demands that CCI sell at least 50,000 bales per day for 100 days through e-auction