Centre should raise Cotton MSP

Centre should raise Cotton MSP
Highlights

The cost of cultivation of three primary crops in Telangana -- cotton, paddy and maize - is much higher than the national average. This is especially so since the minimum support price for any crop is fixed based on the national average of cultivation cost and is not fixed according to local conditions.

The cost of cultivation of three primary crops in Telangana -- cotton, paddy and maize - is much higher than the national average. This is especially so since the minimum support price for any crop is fixed based on the national average of cultivation cost and is not fixed according to local conditions.


The problems relating to minimum support price in Telangana attributes mainly on account of grossly-inadequate supply of quality seed and fertiliser, was leading to farmers taking the extreme step for committing suicide.

The Government of India have fixed the MSP for cotton as Rs.4100/- per quintal, paddy (Medium) as Rs.1410/- per quintal and Rs.1450/- per quintal for paddy(Grade-A) and Rs.1325/- per quintal for maize during 2015-16 Kharif season, by merely increasing Rs. 50/- for paddy and cotton, while Rs.15/- per maize compared to last year, with effect from 1-10-2015 and would increase investment and production through assured remunerative prices to farmers.
Despite deficient rainfall of 12 percent during Kharif during 2014-15 and unseasonal rain and hailstorm in the Rabi season the total foodgrain production in the country has declined by only 5.3 percent in 2014-15. This reflects the resilience of Indian agriculture and success of their Government’s efforts in managing shortfall of rain in last kharif. This year also Government is fully prepared to meet contingency arising out of any shortfall in Monsoon. Contingency plans for 650 districts will be operationalised depending on progress of the Monsoon.
Cotton quandary
For the beleaguered cotton growers across the country including Telangana, the ensuing harvest season will be a repeat of last year’s, with prices hovering below the minimum support price (MSP) levels.

While the Centre has announced a MSP of Rs. 4,100 per quintal for cotton with a moisture content of 8 per cent, there is an expected slump in cotton output by 5-10 lakh bales likely this year, due to various reasons including white fly attack and sparse rains and an expected rise of cotton prices as some farmers from Telangana have demanded an MSP of Rs 5,000 per quintal.
According to CCI the production will be less than the last year's by 5-10 lakh bales. This year, they expect around 370 lakh bales because the overall acreage has shrunk.

As the harvest pressure pulls down the prices amidst huge carry forward stocks in absence of any demand from millers, the Cotton Corporation of India (CCI) is expected to start the purchase centres from October, 20 onwards in Telangana to ensure the minimum support price to the farmers.

It will be opening 83 purchase centres in the eight districts of Telangana from October 13 onwards, Key cotton growing regions of Warangal, Karimnagar, Adilabad and Nizamabad would have about 12 centres each.

The arrivals have begun early this month in Telangana, one of the top cotton-growing States in the country with over 17 lakh hectares of acreage.

Though purchases happened for 3-4 days in Warangal, the market had suspended operations after farmers protested against the low prices.

The protests led to the suspension of purchases for the last one week. The farmers are demanding price of Rs.5,000/quintal. Farmers in Telangana are even taking their produce to major markets such as Raichur in neighbouring Karnataka.

The high price of cottonseed hovering at between Rs.2,000 and Rs.2,100 a quintal is lending some support to the cotton prices currently. With the expected pick-up in arrivals in the coming weeks, prices could come under further pressure. A month ago, the cottonseed prices were ruling at Rs. 2,400-2,500 a quintal.

Though the poor monsoon impacted the cotton acreage in South India, the recent bouts of rains are expected to aid the standing crop in Maharashtra, Karnataka and Telangana.

The CCI has launched a publicity campaign in Telangana by publishing pamphlets in Telugu giving a list of the centres.
It also contains dos-and-don’ts in handling the produce. It asked farmers to ensure a moisture level not exceeding 8 per cent to get a price of Rs.4,100 a quintal.

For each percentage point of additional moisture, the price would come down by Rs.41 a quintal. It said it won’t buy cotton with moisture levels beyond 12 per cent.

Last year, CCI had purchased 87 lakh bales of cotton worth about Rs.17,000 crore from farmers under the minimum support price scheme.

Cotton output in the 2015-16 season starting October is expected to decline to around 340-350 lakh bales against 395 lakh bales last year as the acreage under the fibre crop has dropped by eight per cent to 116.9 lakh hectares from last year’s 126.55 lakh hectares.

Adilabad likely to emerge as top cotton trading unit in 2015-16
Adilabad, which is on the northern tip of Telangana State not affected by the deficit monsoon this time and is likely to emerge as a top cotton trading unit in 2015-2016 given the expectations of a bumper yield, but which has left an adverse impact on almost every cotton growing area in the country.

The yield of cotton this year is anticipated to be in the range of 8 quintals to 10 quintals per acre. The area under the crop being over 3.17 lakh hectares, the total produce would be in the vicinity of 70 lakh quintals.

The Cotton Corporation of India (CCI) has decided to start purchase of cotton under its MSP operations in the district, tentatively on October 13, by which time, arrivals of the new crop to pick up momentum.

As the current price of cottonseed is a high of about Rs. 2,000 per quintal, the chances of private traders entering the fray is also higher.
The entry of private traders may keep the price of the ‘white gold’ higher than the MSP of Rs. 4,100 per quintal for top quality cotton containing less moisture, in October.
The average investment remained comparatively lesser at Rs. 18,000 per acre this season owing to rainfall occurring at desired intervals. The improved yields will therefore ensure healthy profits for farmers.

CCI Adilabad will continue operating 25 purchase centres in the district as they are in the process of readying the cotton processing units. They will strictly implement the condition related with moisture content to be in the range of 8 to 12 per cent in the produce.

However, the experience of last season shows that it is difficult for the farmer and the CCI to weigh the produce in the concerned market yard and transport it further to the factory. The government, on its part will need to open sub market yards at places like Bellampalli, Kadem, Neredigonda, Sonala etc. where ginning factories are located even 22 km away from the market yard.
Taking note of the distress to cotton growers of Telangana due to fall in cotton prices, the Central Government should increase MSP of cotton from Rs.4010/- to Rs.5000/- per quintal to arrest the spurt in suicides of farming community.

The exports were also badly hit in 2014-15, it stood 55 lakh bales as against 70 lakh bales. The year before, exports stood at 118 lakh bales.

CCI should buy all the cotton that was produced in the State at MSP, since it was being sold at below MSP in Telangana State. The Central Government should direct the CCI to buy all the cotton at MSP of Rs.5000/- at least in our State.

The US Department of Agriculture (USDA) estimated that India will surpass China as the top producer of cotton in 2015/16, and will account for 27 per cent of the global cotton crop. Now, this is the time to export more cotton to other countries like China and US.

G.Rajendera Kumar
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