Slump looms over Punjab cotton growers

Despite a shortfall of 15% in arrival, cotton prices in the state have lowered

The global economic slowdown has cast its shadow over cotton procurement in Punjab. Despite witnessing a shortfall of 15 per cent in arrival, prices of cotton in different mandis of the state are hovering between Rs2,500 and Rs4,500 a quintal against the minimum support price (MSP) of Rs3,600 a quintal.

Last year, prices were ruling around Rs2,600 to Rs4,555 a quintal against Rs2,800 a quintal MSP — more or less same compared with this year.

According to the state government data, as on October 24, 2012, overall 628,000 quintals (125,000 bales) of cotton were procured from different mandis of the state by private traders and the Cotton Corporation of India (CCI) in the current procurement season, compared with 737,000 quintals (147,000 bales) during the corresponding period last year. At present, the procurement in Punjab is dominated by private traders, as they procured 629,000 quintals while CCI managed to procure only 3,060 quintals.

Speaking to Business Standard, Punjab Cotton factories & Ginner’s association President, Bhagwan Bansal said, “There is a weak demand of cotton in international market because of weak global economies. Even countries like China have stopped buying cotton. Ginners and millers are not doing aggressive buying owing to delayed payments from clients.”

Besides, high taxes on cotton in Punjab is acting as deterrent to the farmers, as they go to neighboring states to sell their produce. Taxes in neighboring Rajasthan and Haryana were lower than Punjab, which encouraged farmers to sell their produce in these states, Bansal said. Punjab levies a total of about 16.40 per cent tax on cotton under various heads compared to 10.50 per cent levied by Haryana, 9.60 per cent by Rajasthan, eight per cent by Madhya Pradesh and Maharashtra and 7.50 per cent by Gujarat. So, no exporter prefers to buy Punjab cotton.

CCI participation in procurement process, Bansal says, is tepid at present and suggest more involvement of the body in the process to ensure better remunerative for farmers.

Drought-like conditions, shortage of canal water supply have cast their shadow on cotton area in Punjab. According to data, total area under cotton cultivation in Punjab stands at 495,000 hectares this season and the total estimated production is 1.85 million bales (1 bale=170 kg).

Last year the total area under cotton was 515,000 hectares while total production was 1.68 million bales.