Revised cotton MSP puts Maharashtra in quandary

The Central government decision to increase the minimum support price (MSP) for all varieties of cotton by 40 per cent has put the Maharashtra government in a difficult situation. If it accepts the decision and procures cotton at the MSP, then it will take a hit of around Rs 1,500 crore.

But if it does not or delays the decision, it will have to pay dearly in political terms in this election year. The Congress-NCP combine is already finding itself on a shaky ground in the cotton-growing Vidarbha region due to farmer suicides there.

State government officials are lobbying with the authorities in Delhi for either a compensation for the losses Maharashtra will incur or appointment of the Maharashtra State Cotton Growers Cooperative Federation (MSCGCF) as an agent of the National Agricultural Cooperative Federation of India (NAFED) or Cotton Corporation of India (CCI), the central government agencies for cotton procurement.

A senior official in the state’s cooperative ministry said the central government had declared an MSP of Rs 2,000 to Rs 4,200 per quintal for cotton earlier this year, but across all the varieties the average price difference between the MSP and the market price was Rs 450 to Rs 500 per quintal.

“This year, we expect the cotton production in the state to be around 35 million quintals, out of which we will have to procure at least 30 million quintals. This will put a burden of around Rs 1,500 crore on the state government,” he claimed.

Last year, since cotton prices were high across the world despite the production of 27.5 million quintals, MSCGCF bought only around 15 million quintals as many farmers chose to sell their produce to private traders.

“However, the situation this year is completely different. Production is high and we are offering higher price than the market rate,” he pointed out, adding that the state was trying to convince the central government to appoint MSCGCF as an agency of CCI or NAFED, so that not only losses incurred in procurement were covered by these agencies but it (procurement) also earned a 2 per cent commission.

“There is also a precedence for such a decision. The Gujarat Cotton Growers Cooperative Federation (GUJCOTT) is acting as a procurement agency of NAFED since 2005,” the official said.

“Despite our repeated attempts to convince the agriculture and textile ministries on this issue, no decision has been taken. Normally, MSCGCF starts its procurement operation by the first week of October, but this year we have not been able to start our operations,” the official added.