Govt to limit cotton procurement
In a significant move, the government appears to have limiting the cotton procurement to only 20-25 lakh bales in the current market year that began last month.
To buy only 25 lakh bales at the support price this year, against 87 lakh bales last year
We have started cotton procurement at a minimum support price levels. As compared to last year, we will not purchase more than 20-25 lakh bales this time because cotton seed prices are comparatively good
– B K Mishra, CMD, CCI
Hyderabad: In a significant move, the government appears to have limiting the cotton procurement to only 20-25 lakh bales in the current market year that began last month. The officials claim, strangely, that the domestic prices are higher than the support price in most parts of the country.
According to senior officials, the state-run Cotton Corporation of India (CCI) had purchased 87 lakh bales (of 170 kg each) during the 2014-15 marketing year, which runs from October to September. "We have started cotton procurement at a minimum support price (MSP) levels. As compared to last year, we will not purchase more than 20-25 lakh bales this time because cotton seed prices are comparatively good," CCI CMD B K Mishra said.
However, a visit to Warangal cotton market, the second largest in the country, reveals the market price is far below the support price. “The best quality cotton is sold at 3,800 per quintal,” says the sources. The government has fixed the MSP at Rs 4,100 per quintal for long staple cotton and at Rs 3,800 per quintal for medium staple cotton for the 2015-16 marketing year.
Mishra said that the corporation has so far purchased 3,000-4,000 bales in Telangana and Andhra Pradesh. "We will procure in Maharashtra, but in other states, we may buy negligible quantity," he added. Further, the CCI CMD said that the corporation is planning to open over 300 centres across the country and will procure mainly in Telangana, Andhra Pradesh and partially in Maharashtra, he added.
CCI has opened 84 centres in Telangana and 25 centres in Andhra Pradesh and targets to set up a total 43 centres in AP and 50 centres in Maharashtra. Cotton procurement will be much lower this season because prices have not fallen below the MSP in most places. The CCI will buy comparatively at higher price, Mishra clarified.
However, Mishra pointed out that the cotton prices are varying in state. “The prices are lower in some states due to 35 lakh bales of surplus stocks and weak export demand. However, rates in north and central region are comparatively above MSP. Prices are higher in north because of whitefly pest attack," he said.
According to Mishra, the cotton prices are ruling at Rs 4,500 per quintal in Punjab, Rs 4,400 in Gujarat, over Rs 4,200 in Maharashtra. "But in places where there is no access of traders, prices are relatively lower. At those places, we are buying from farmers," he claims.
However, the sources in Warangal claim that there is no buying activity by the CCI, pushing the farmers to hardship. The CCI procures cotton from farmers at the MSP and sells the stocks in the market later. Any loss incurred out of the procurement operation is reimbursed by the government.