A government official said government procurement of cotton may remain slow even after the new crop season begins in October, as commodity prices are expected to remain high, charting a development that could benefit farmers. But garment manufacturers may suffer.
The spot price of cotton has hit a record high of almost 1 lakh per candy amid decline in production in major cotton producing countries including India.
The cotton production estimate in India has already been slashed to 31.5 million bales for FY13 as production in major cotton producing states like Maharashtra and Karnataka is set to fall due to pests and heavy rains.
Globally, cotton prices jumped after the US, one of the largest cotton producing countries, cut its production estimate for FY13 by 3 million bales to 12.6 million bales.
“Prices will definitely drop from the new season starting from October. But in the next full season, I do not expect any MSP operation (as the prices will go up). Cotton prices are expected to remain well above the MSP.
“During Covid-19 the demand was less and that is why 20 million bales were procured at MSP in those two years. Earlier also the purchase of cotton was less.
However, the government has said that there is sufficient stock of cotton in India as the total availability of cotton without considering imports is 38 million bales while the consumption is 32 million bales this year.
“The carry-over stock for the next cotton season may be the lowest in many years. But at present the problem is the productivity of cotton. It has stagnated due to shortage of new seeds and frequent pest attacks and diseases,” said the official.
The productivity of cotton has changed little over the years and averages between 450 kg per hectare to 500 kg per hectare, as against 400 kg per hectare in 2006-07. Meanwhile, the global average for cotton productivity is 877 kg per hectare.
Experts say there was a huge jump in demand for cotton this year, but production fell by more than 20%, leading to a rise in cotton prices.
Textiles are an important part of free trade agreements (FTAs) that India is negotiating with countries such as the UK and the European Union. Duty cuts for Indian textile products could make Indian exports more competitive and at par with countries like Bangladesh and Vietnam.
Industry representatives also expect the textile demand from India to increase due to the FTA signed with UAE and talks with Australia.
A query sent to the Ministry of Textiles at press time remained unanswered.
Textiles secretary UP Singh had earlier said that there used to be a surplus of 5 to 60 lakh bales in India but this surplus is falling every year. In addition, the Indian industry had a 10% price advantage with respect to cotton. “But it is not now because our consumption will outpace production in the near future,” he said.
Textiles Minister Piyush Goyal had said in a meeting earlier this month that all stakeholders should share best practices to increase the productivity of cotton in India to increase the income of farmers.
According to a statement issued by the Ministry of Textiles, Goyal had said that the private sector should contribute to productivity, education of farmers as well as promoting research in branding, for which the government would provide similar support.
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