Revised cotton MSP gives Cotton Corp edge over pvt traders

There might be a slump in the demand for cotton due to the global downturn, but the Cotton Corporation of India (CCI) has been able to procure 3.18 million quintals of the commodity this procurment season, till December 15.

This is almost 28 times more than the procurement made during the corresponding period last year, while the private traders procured 1.34 million quintals of cotton.

The share of CCI increased at the cost of private traders due to a 40 per cent increase in the minimum support price (MSP) of cotton.

During the same period last year, CCI procured only 115,343 quintals of cotton, while the private traders made a procurement of 4.92 million.

During the last procurment season (2007-08), CCI procured only 358,602 quintals of cotton, while private traders procured 9.03 million quintals.

Prior to the entry of CCI in Punjab this year, the procurement was dominated by private traders. Also farmers were distressed in the absence of any government agency. Private buyers were offering them price lower than the MSP.

Earlier, the average price in the cotton markets in Malwa region, one of the prominent cotton belts in Punjab, was quoted much below than the MSP of Rs 2,800 (for long staple, 27.5 mm-32.0 mm).

As a result, farmers were compelled to explore other markets in Haryana and Rajasthan, where they were offered Rs 100-150 more per quintal. Also, farmers were reportedly unhappy with some commission agents who had been conniving with private companies by allegedly keeping the official agencies out.

But after the arrival of the CCI, farmers started to receive better remuneration. In majority of the cases, the private traders are purchasing stock that is rejected by the CCI.

Industry experts are of the view that high taxes coupled with high MSP is acting a major hindrance in procurement by the private traders. The state charges 12.5 per cent tax on the cotton, compared with 7.6 per cent in Rajasthan and 10 per cent in Haryana.

Also, CCI pays Rs 2,600-2,800 per quintal, which is much higher than the private traders.

Meanwhile, the Punjab Chief Minister Parkash Singh Badal yesterday late evening also appreciated the CCI which had already lifted the bulk of cotton procured in Punjab but at the same time he emphasized the need to maintain the tempo of procurement particularly by the end of season as it seemed to be tapering off due to the issue of revenue record to be produced by the prospective sellers.

He also urged the Union Minister of Textiles Shankersingh Vaghela and sought his personal intervention to immediately direct the Cotton Corporation of India (CCI) to continue procurement of cotton without insisting upon production of revenue record and instead accept the certificate issued by village Sarpanch/Agriculture Produce Market Committee (APMC) certifying the prospective seller to be a actual farmer.