The South Indian Mills Association (SIMA), which represents textile mills in Tamil Nadu, has urged the Cotton Corporation of India (CCI) to commence procurement of cotton at the minimum support price (MSP) in the state.
T Rajkumar, chairman of SIMA, said the cotton prices had been highly volatile in the past five years due to various factors. If India continues to increase its production during the current cotton season, it would become the largest producer, and is likely to achieve a record production of 40 million bales.
However, China, the largest cotton consumer and importer, influences the international prices of cotton.
He noted that to deplete its high-cost cotton, amounting to almost two years of stock, in February 2014, China had come out with a cotton policy restricting imports to 25 per cent of its consumption and also extending over 25 per cent subsidy for the reserve cotton.
“This had seriously affected international cotton prices. From August 2014, New York Futures for cotton had remained below 70 cents, as against the normal rate of over 90 cents. As the MSP of Indian cotton is much higher than this, the poor offtake had seriously affected cotton farmers in India in the current cotton season,” said Rajkumar.
He said the Centre had already directed CCI to procure over 10 million bales during the current season under MSP operations and it had been allocated the necessary funds. Of around 17 million bales that had arrived in the market, the CCI had been able to cover around five million bales, mostly coming from the Telangana state.
“With Tamil Nadu being amongst the lowest cotton producing states, the CCI had not undertaken any commercial projects or procurement under MSP operations in the last 20 years. But this year, the state is likely to produce 500,000 bales during the winter season and 100,000 bales during the summer. Currently, the market price of kapas (seed cotton) is ruling much lower than the price defined under the MSP operations, and the arrivals are likely to pick up soon,” he said.
The association has asked Centre to direct CCI to get ready for MSP operations in Tamil Nadu and had also sent a representation to the chief minister of Tamil Nadu, urging him to pressure the Centre on this issue.
Rajkumar noted the Tamil Nadu government had allocated Rs 50 crore for establishing a Cotton Cultivation Mission to increase cotton production from the current level of 600,000 bales to three million bales.
“If the CCI commences the MSP operations, it will sustain the confidence of cotton farmers and help the state make a substantial progress in the Cotton Cultivation Mission,” said Rajkumar.