Cotton industry unhappy, prices fall further

The central government’s partial rollback on the cotton export ban and its changing policy in this regard too frequently has been criticised by industry and trade bodies.

After last week’s export ban order, the government says exports would be allowed under open general licence but no new registration certificates (RCs) are to be issued for now. Besides, RCs issued earlier would now have to be revalidated before any export can be done.

Today’s notification has led to a further fall in raw cotton prices,to Rs 3,400 a quintal from Rs 3,700 a quintal. Procurement continues to be at a standstill in the growing states. State-run Cotton Corporation of India (CCI) said it was keeping a vigil on procurement and prices in the wake of the partial roll-back. A CCI official told Business Standard: “We will intervene and start procurement when prices reach the Minimum Support Price level of Rs 3,300 a quintal, as done last week in Andhra Pradesh.”

N P Hirani, chairman of The Maharashtra State Cooperative Cotton Growers’ Marketing Federation, said the government must fully reopen export. There was no need for keeping on hold issuance of new RCs. “We are discussing the fresh notification at our board meeting slated for Tuesday and will express our opposition. The decision will further harm the farmers and cotton prices in particular,” he said.

Jaggubhai Shah, chairman and managing director of Gill & Co, said today’s decision would definitely have an adverse impact on prices. “I expect the prices will fall by Rs 1,000 a candy (356 kg). Raw cotton prices have already crashed to Rs 3,400 a quintal. At stake is India’s credibility and reliability in the international market and such inconsistent policies will further impact it.”

Of the 12.5 million bales registered so far for export, 9.5 million have been exported and three million are yet to be shipped.

Dharmesh Mehata, director, Gokul Cotton Pvt Ltd, Mahua (Saurashtra) said ginning mills in Gujarat alone may have incurred a loss of Rs 600 crore in the past five days. There are 1,000 ginning mills with a daily pressing capacity of 80,000 bales (a bale is 170 kg), he said. He pressed for opening of exports at the earliest.