Cotton procurement at 2-2.5 million bales

The government will procure only 2-2.5 million bales (one bale equals 170 kg) of cotton in the current marketing year against 8.7 million bales in the previous one, said B K Mishra, chairman and managing director, Cotton Corporation of India (CCI). This is because domestic prices are higher than the minimum support price (MSP) in many parts of the country, which means CCI will have to buy cotton at higher prices this year.

The cotton marketing year runs from October to September the next year.

Procurement for this year has already started at MSP levels, at Rs 4,100 a quintal for long cotton and Rs 3,800 a quintal for medium staple cotton.

CCI has so far purchased 3,000-4,000 bales in Telangana and Andhra Pradesh. Mishra said procurement would continue in these two states.

According to him, the whitefly pest attack in Punjab has pushed up rates in the northern and central regions above the MSP. However, a major surplus of 3.5 million bales, along with weak export demand, has lowered prices elsewhere. The Cotton Advisory Board estimates India's total production to be lower by 1.5 million bales at 36.5 million in 2015-16.

CCI procures cotton from farmers at the MSP and later sells the stocks in the market. Any losses from procurement is reimbursed by the Central government. Currently, the prices are the highest in Punjab at Rs 4,500 a quintal, while it is Rs 4,400 in Gujarat and Rs 4,200 in Maharashtra and Telangana.

CCI also plans to open around 300 procurement centres across India, mainly in the cotton belt comprising Telangana, Andhra Pradesh and Maharashtra.

It has already opened 84 centres in Telangana and 25 in Andhra Pradesh. A total of 43 centres in Andhra Pradesh and 50 centres in Maharashtra are targeted.