Maha challenges state's leadership in cotton

Mills & exporters shift their procurement focus to Maharashtra

Gujarat's numero uno position in India's cotton trading seems to be challenged by its neighbouring state, Maharashtra. This could be gauged by the fact that the spinning mills and exporters from across the country have shifted their procurement focus from Gujarat to Maharashtra due to cost and quality issues.

The cotton ginners in Gujarat are allegedly found to be resorting to malpractices such as mixing. "The cotton quality in Gujarat is getting deteriorated. Around 20 per cent of the ginners in Gujarat are found to be mixing lower quality of cotton with the good one. We have found short staple varieties like V-797 and comber nail, which is a type of waste from ginning being mixed in the higher quality of cotton. Also, the Gujarat cotton has high moisture content, which adds to the losses, hence we and many of the domestic millers as well as exporters are found to be shifting to Maharashtra for their cotton procurements," said a cotton trader and exporter from Kolkata.

Also, the transportation cost from Gujarat is higher than that from Maharashtra. This is also sighted as one of the reasons for a shift in the purchases from Gujarat to Maharashtra. "Many of the millers from South India have avoided procurement from Gujarat and started purchases from Maharashtra as it helps companies save at least Rs400 per candy on the logistical cost," said a Surendranagar-based cotton trader.

According to market participants, the trend of shifting procurement focus from Gujarat to Maharashtra has been going on for last two years and gradually around 50 per cent of the buyers have dropped Gujarat as their preferred procurement destination. Many cotton ginners from Saurashtra, a cotton heartland, have expressed fear of Maharashtra taking away the Gujarat's share of business due to quality and cost benefits.

Expressing concerns over the changing situation, Anand Popat, secretary of Saurashtra Ginners Association (SGA) said, “It is true that our ginners, especially the small ginners are not maintaining the quality. They have damaged the goodwill of Gujarat's cotton by resorting to unfair practices like mixing and not maintain the quality. If we do not change our mind, it will tarnish the image of Gujarat and break its monopoly in cotton business.”

Further, Dilip Patel, president, Gujarat Cotton Ginners' Association from Kadi says, “Quality and mixing is serious issues and we must address it as soon as possible. Some market share has diverted to Maharashtra due to quality and mixing issues in Gujarat. But as far as our monopoly is concerned, it is still there for Sankar-6 variety of cotton."

This year, Gujarat witnessed untimely rains, which may reduce the cotton production in the state. But Maharashtra's cotton output estimates show a rise, which further fuels the state's prospects to see increased buying in coming months. Due to increased buying from the millers and exporters, the cotton prices in Maharashtra have increased to match with Gujarat. Trader sources informed that traditionally Maharashtra cotton was priced at discounted rate than Gujarat cotton. "First time in the recent history, Maharashtra cotton is priced at par with Gujarat prices. In Gujarat the cotton price was around Rs990 - 1000 per 20 kg, while in Maharashtra it ruled at around Rs 1000 - 1050 per 20 kg," said an Ahmedabad-based cotton trader.Gujarat holds around 30 per cent of share in the country's total production, while that of Maharashtra contributes around 28-30 per cent. Maharashtra mainly grows MECH or H4 variety(fibre length 29 mm) as well as NSL varietyof cotton.

It is also evident from the fact that arrivals from Maharashtra to Gujarat markets have almost stopped since past 8 to 10 days. "Maharashtra’s cotton arrivals are nil at present, as farmers in the state get better prices compared to Gujarat," said, Arvind Patel, vice-president, SGA.However, for past couple of years the state's cotton production has increased. The average cotton production in Gujarat during last three years is recorded at around 1 crore bales. The some of the cotton varieties including Shankar-6 have become the trademark of the state. But the incidents of mixing and manipulation may leave the state's cotton industry in a state of anguish.