Govt to procure 9 million bales of cotton to arrest price fall

To arrest the steep fall in domestic cotton prices this year, the government today said that it will immediately procure around 9 million bales of cotton from farmers (1 bale=170 kilograms). The decision to procure around 27% of the total 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 sudden and sharp fall in domestic cotton prices to MSP levels in some places like Andhra Pradesh, Maharashtra, Punjab, Rajasthan and Madhya Pradesh.     

Despite a 5.1% 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.

Textiles minister Anand Sharma has also appraised the Prime Minister on the situation and suggested setting up of a Group of Ministers (GoM), headed by the Finance Minister, to oversee the procurement operations and the sales plan, the statement said.  

The MSP of medium staple cotton has been fixed at Rs 3,600 per quintal, while for long staple cotton it is at Rs 3,900 per quintal for 2012-13 season, which 28.6% and 18.2% more than last year. 

To procure cotton from farmers the government will open 228 procurement centres, bulk of which will be in Maharashtra and Gujarat, the two biggest cotton growing states.

India's cotton consumption this is is estimated to be around 26 million bales and exportable surplus at 7 million bales.