Alarm at falling cotton price

The sharp fall in price of cotton bale in the national market and the declining exports of cotton yarn is an ominous sign for the huge cotton trade and the processing industry in erstwhile undivided Adilabad district. The trend is expected to have a direct and negative impact on the price of raw cotton when the market opens for trading around Dasara festival and going by past experience, it will result in discontent among farmers, at least for a few days after commencement of trading.

The sensitivity of the matter can be gauged from the fact that nearly 3.5 lakh cotton farmers contribute their produce to make undivided Adilabad a top trading centre in the country. The cumulative production capacity in erstwhile Adilabad is between 16 lakh and 18 lakh bales and the turnover is about ₹ 5,000 crore during the six month season starting October.

CCI may go slow

The anticipated downward trend of open market rate will force the Cotton Corporation of India to launch its minimum support price operations right from the start of the trading season. “The CCI, however, is expected to be slow in its operations as it is already saddled with about 8 lakh bales from last season, thanks to the dipping price,” an industry source pointed out.

“Trading is likely to be affected by the usual high moisture content issue at the start of this season too according to indications. The administrations in all four districts should start creating awareness among farmers to bring dry cotton to the markets in order to avoid the produce being denied its proper price as,” cautioned B. Goverdhan Reddy, a farmer leader from Telangana Rashtra Samithi party.

The government has increased the minimum support price of long staple cotton from ₹ 5,450 per quintal last year to ₹ 5,500 per quintal which may be a welcome development for farmers but traders and industrialists say it can spell doom for them.

Current downtrend

“The production cost of one candy of cotton bale (candy=2 bales of 178 kg each) comes up to ₹ 47,500 while its price in December is ₹40,500,” Rajiv Mittal, a cotton trader and processor compared the costs to drive home the point that traders will lose heavily if they purchase cotton at MSP given the current downtrend.

“To benefit farmers, the governments can give them bonus money as direct benefit transfer instead of insisting on private traders or the CCI go by MSP,” a trader suggested.

Source: The Hindu, India
Wednesday, 04 September 2019

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