With speculation that private players may not show enthusiasm in purchasing cotton, Central Government agency Cotton Corporation of India Limited (CCI has started preparations to enter the market in Punjab after four years. It expects the quality of raw cotton to be reasonably good to make procurement at the minimum support price (MSP). Initially, weak international demand and higher support price of cotton in India has made ginners and textile sector reluctant to buy cotton this season.
The Union government had announced the MSP of long staple (27.5-28.5mm) cotton, commonly grown in Punjab, at ` 5,450 per quintal for 2019-20. After facing inclement weather in July, cotton crop is progressing well and growers feel if no more rains lash the region in the coming days the crop is expected to remain good and they may get a yield of nearly 770kg of lint per hectare.
Raw cotton arrivals have been reported in small quantities in some mandis in the last two days and have fetched rates above the MSP. Market analysts said these were expected to come down when arrivals go up in the coming weeks.
Area under cotton in Punjab in the 2019-20 crop year is estimated to be around 4 lakh hectares, up from the provisional figures of 2.84 lakh hectares in the last season. According to the Punjab Agriculture Department Data, the estimated output of raw cotton in 2018-19 was 12.22 lakh bales while the CCI had put the figures at 11.50 lakh bales. The CCI is ready to enter the market to procure cotton directly from farmers without any middlemen. Last time, the central agency had done the procurement in 2014-15.
The CCI will have to settle issues with the strong lobby of arhtiyas in Punjab, who are opposed to direct procurement. The agency has already floated tenders for labour, godowns, transport and ginning. There are 61 ginning factories in Punjab. Till Wednesday, the CCI had got the consent from 32 ginning factories for purchases.
CCI’s Bathinda branch manager Neeraj Bhankhar said that, “We are fully prepared to make purchases directly from farmers from the first week of October. Tenders for various services related to cotton purchase have been floated. Everything is expected to be in place before the start of the season in October.”
On the other hand, Federation of Arhtiyas Association Punjab president Vijay Kalra said that, “We are sticking to our demand of purchases to be made through commission agents. Our fingers are crossed and we are waiting to see how things unfold.”
Trade body Indian Cotton Association Limited president Mahesh Sharda said the increase of 27 percent in the MSP of cotton in 2018- 19 as compared to the previous year proved dear to the textile industry. “Now, cotton in the international market is cheaper than in India, which is making our textiles industry uncompetitive. In such a scenario, private players may avoid making bulk purchases in the domestic market,” he said.