Cotton farmers demand increase in export quota

At a time when the deadline for cotton exports comes to an end on December 15, the farmers' groups and federations are seeking an increase in cotton export quota from the current 55 lakh bales (one bale = 170 kg) to around 90 lakh bales.

The demand to raise the cap on cotton exports from India was made in a meeting with Sharad Pawar, minister of agriculture, government of India, on Monday in Delhi.

Cotton farmers fear a steep fall in prices if the export quota limit is not raised as it would lead to an increased supply of cotton in the domestic market.

Maganbhai Patel, a veteran farmers' leader and president, Bhartiya Kisan Sangh (BKS) informed Business Standardthat the increase in export quota is inevitable to avoid creation of substantial cotton surplus in the domestic market. "In our meeting with the union agriculture minister, Sharad Pawar on Monday, we demanded raising cotton export quota to 90 lakh bales from the current 55 lakh bales. We have been given assurance that the government will take up the issue in their meeting on December 15, when the deadline for quota expires," said Patel.

The farmers of Gujarat had taken out a 'Kisan Swaraj Yatra' starting from Sabarmati Ashram to Rajghat in New Delhi. The rally spanning over a period of 17 days covered 20 states gathering support of farmers from different states on various issues.

In order to check spiralling prices of cotton in the domestic market, the union government had capped cotton exports from the country at 55 lakh bales, for which registration period started from October 1 and it expires on December 15. However, most of the industry players are of the view that the time limit set by the government for execution of exports of 55 lakh bales of cotton was very narrow and practically not feasible.

"The government had set a very narrow time period for order execution of cotton exports. Still today, about 20 lakh bales of the set quota is lying unshipped either at ports or at the warehouses. Practically, traders needed more time for exports," said NM Sharma, managing director, Gujarat State Cooperative Cotton Federation (GujCot).

In the wake of exports quota, cotton prices have already come under pressure. The prices have come down from Rs 47,500 per candy (1 candy= 356 kg) in October to Rs 40,000 per candy at present. Industry experts believe that the prices could plummet further if more exports are not allowed.

The demand for allowing more exports than the cap of 55 lakh bales stems from the fact that India is poised to have a fairly good cotton output in current cotton year (Oct-Sept).

Also, the cotton prices in the international market are ruling higher than the domestic market. Currently, the prices in global market are hovering around 125 cent per pound, which works out to be around Rs 48,000 per candy.

As per the industry estimates, the cotton production in the country is estimated to be around 330-340 lakh bales. However, government estimates peg cotton output in 2010-11 at not less than 325 lakh bales.

"Given the buoyant cotton output scenario, there is still room for more exports than the stipulated quota of 55 lakh bales," said Sharma, adding that the government should give separate quota for the farmers' organizations.