Business Standard: In the event of a bumper crop, what is the CCIs role in cotton market and how will it help farmers, industries and exporters to earn foreign exchange?.
M B Lal: As and when there is a bumper crop and the prices fall below the support prices, the Cotton Corporation of India (CCI), in accordance with its basic role, would buy any quantity of raw cotton offered to it at the minimum support price (MSP) announced by the government. The farmers, hence, shall have no occasion to sell their kapas below the support price. CCI will be present in the market to buy any quantity of kapas.
In case the prices do not fall below the support price level, the CCI, with the help of its infrastructure available throughout India, shall try and procure the indents from mills, both in the private as well as the institutional sector, which in turn will help CCI to boost its purchases on commercial basis.
With its reputation for supplying quality cotton and good after sales services, CCI had been able to procure sufficient indents in the past to help the farmers to get remunerative prices for their produce. In the event of an easy supply position, CCI tries to buy good quality cotton at remunerative prices and will concentrate on processing such cotton with the least contamination so that our textile mills, particularly the export oriented mills, can get good quality cotton and improve realisation of their finished
product.
Our emphasis shall be to buy quantities from growers to give them support in the event of bumper crop and supply cotton to the consumers with low margin of profit so as to increase its turnover. The CCI, in the event of bumper crop, also approaches the government for releasing export quota so that it can increase its purchases from the open market, thereby helping the farmers.
BS: What is CCIs role in maintaining quality control in cotton exports?
MBL: The share of the Corporation in the domestic market is limited to about 7 to 8 per cent only. The CCI has to make efforts to capture the domestic buyers and overseas buyers by constantly improving its quality and service.
The CCI has, therefore, identified improvement in quality and improvement in processing as one of the thrust areas. To improve the processing, CCI has introduced several incentives to the ginning and pressing factory-owners to improve their infrastructure. CCI is also making special efforts to remove the contaminations from cotton.
In fact, it has already tied up arrangements with some factories for producing cotton totally free from contaminations. All these measures have brought out the desired results to a large extent in that, not only the quality of cotton has improved but the quality of processing and the packing have also improved considerably. As a policy, all the lots of entire cotton purchased by CCI are tested at modern laboratories for constant monitoring of standards. Further, the bales which are to be offered for exports are examined at the point of despatch at spot as also at the point of shipment before the bales are shipped.
It is ensured that cotton being shipped is free from any country damage and fully packed as per BIS standards. It is also ensured by drawing samples before the physical shipment that the quality matches with the description agreed with the buyers at the time of contracting. A detailed and comprehensive drill had been prescribed at all stages of procurement, processing, storage, drawal of samples, storage, despatch and shipment to ensure the quality standards at international standards level.
BS: What is your opinion on futures trading in cotton? Should it be started again in India? Why? and How ?
MBL: Futures trading can be for both - kapas and lint FP bales. As regards to kapas, in India, majority of farmers have small land holdings. As a le to international
spinners.
