Govt aims to buy only 20-25 lakh cotton bales at MSP this year

Government may procure only 20-25 lakh bales of cotton in the current marketing year that began last month as domestic prices are higher than the support price in many parts of the country.

The state-run Cotton Corporation of India (CCI) purchased 87 lakh bales (of 170 kg each) in the 2014-15 marketing year, which runs from October to September.

"We have started cotton procurement at a minimum support price (MSP) levels. As compared to last year, we will not purchase more than 20-25 lakh bales this time because cotton seed prices are comparatively good," CCI Chairman and Managing Director B K Mishra told PTI.

The CCI has so far purchased 3,000-4,000 bales in Telangana and Andhra Pradesh. "We will procure in Maharashtra, but in other states, we may buy negligible quantity," he said.

The corporation plans to open over 300 centres across the country and will procure mainly in Telangana, Andhra Pradesh and partially in Maharashtra, he added.

It has opened 84 centres in Telangana and 25 centres in Andhra Pradesh. It targets to set up a total 43 centres in AP and 50 centres in Maharashtra.

Cotton procurement will be much lower this season because prices have not fallen below the MSP in most places. The CCI will buy comparatively at higher price, Mishra informed.

The government has fixed the MSP at Rs 4,100 per quintal for long staple cotton and at Rs 3,800 per quintal for medium staple cotton for the 2015-16 marketing year.

"At present, cotton prices are varying in states. Prices are lower in some states due to 35 lakh bales of surplus stocks and weak export demand. However, rates in north and central region are comparatively above MSP. Prices are higher in north because of whitefly pest attack," he said.

Cotton prices are ruling at Rs 4,500 per quintal in Punjab, Rs 4,400 in Gujarat, over Rs 4,200 in Maharashtra. In Telangana, prices in most parts of the state are ruling above Rs 4,200 per quintal.

"But in places where there is no access of traders, prices are relatively lower. At those places, we are buying from farmers," he said.

Cotton arrivals, which were slow due to Diwali, will pick up from today onwards.

As per the Cotton Advisory Board, India's cotton production is estimated to be lower by 15 lakh bales at Rs 365 lakh bales in 2015-16.

The CCI procures cotton from farmers at the MSP and sells the stocks in the market later. Any losses out of the procurement operation is reimbursed by the government.