Govt to buy 9 mn bales of cotton to arrest price fall

To arrest the steep fall in domestic cotton prices this year, the government on Friday said it would immediately procure around nine million bales of cotton from farmers (1 bale is 170 kg).

The decision to procure around 27 per cent of the cotton produced in the country this year was taken at a high-level meeting attended by Agriculture Minister Sharad Pawar and Textiles Minister Anand Sharma on Thursday.

The meeting was called in view of the sudden sharp fall in domestic cotton prices to minimum support prices (MSP) levels in some places of Andhra Pradesh, Maharashtra, Punjab, Rajasthan and Madhya Pradesh. Despite a 5.1 per cent fall in cotton production this year at 33.4 million bales, domestic prices have shrunk because of weak global prices following a sharp decline in global trade and increase in world stocks, an official statement said.

Sharma has apprised the Prime Minister on the situation and suggested setting up a group of ministers, headed by the finance minister, to oversee the procurement and sales plan, the statement said.

The MSP of medium staple cotton has been fixed at Rs 3,600 a quintal. Long staple cotton MSP is Rs 3,900 a quintal for 2012-13 season.

To procure cotton from farmers the government will open 228 procurement centres, mostly in Maharashtra and Gujarat, the two biggest cotton growing states. India's cotton consumption is estimated at 26 million bales and exportable surplus at 7 million bales.