The small and medium (SME) spinning mills in Tamil Nadu, which manufacture cotton yarn, have curtailed their production during night shifts and weekends due to abnormal increase of cotton price.
The small and medium (SME) spinning mills in Tamil Nadu, which manufacture cotton yarn, have curtailed their production during night shifts and weekends due to abnormal increase of cotton price. The skyrocketing of cotton prices every year during the off season has affected the SME mills in Tamil Nadu. The South India Spinners’ Association (SISPA), in a release on Monday said, the beneficiary of the spike in cotton prices are multinational companies, traders and CCI. Cotton during the peak arrival season is procured from farmers at MSP rates and hoarded by multinational companies, traders and CCI. The SME mills do not have the financial capacity to buy cotton and store till the next season.
After the cotton season gets over the above companies unilaterally create an artificial vacuum in the market and within a month they inflate the price of cotton by nearly eight to ten thousand rupees a candy. It pointed out that during April 2018 the cotton prices were ruling around Rs 38,000 per candy level whereas the by the end of June it has reached R48,000 per candy. “We do not understand what has warranted the traders to inflate the cotton prices to this level. Enormous profits are earned by the multinational companies’ big traders and CCI,” said SK Rangarajan, president, SISPA.
The SME spinning sector inevitably buys cotton for its usage on monthly basis resulting in incurring huge cash losses every year. The SME Mills sell their yarn in the domestic market and are unable to fetch higher yarn prices incurring phenomenal losses and sustainability.