Financial Daily from THE HINDU group of publications
Saturday, Aug 10, 2002
Agri-Biz & Commodities
Dry spell may hit cotton
MUMBAI, Aug. 9
THE prospects of domestic cotton crop, impacted by the prolonged dry spell in July, are showing signs of improvement; but concerns over possible drop in production remain, industry representatives said.
Cotton acreage, which is normally in the range of 85-90 lakh hectares, is likely to be lower by 15-20 per cent this season. As a result, cotton imports into the country are expected to remain unabated and possibly increase from the 22 lakh bales of 2001-02.
As cotton is one of the most vulnerable crops to the vagaries of monsoon, it could suffer larger damage in the event of heavy rains in the reminder of the monsoon.
``The crop appears to be picking up across most states, barring Rajasthan,'' said Mr Vishwa Nath, Chairman and Managing Director, Cotton Corporation of India (CCI). Rajasthan which harvests about 10 lakh bales of cotton annually is the most hit because of the dry spell. ``Rajasthan has received very little rains and in parts none. Besides, irrigation cover is negligible. The crop would be lower by 15-20 per cent,'' he said.
In Punjab and Haryana irrigation appears to have helped although there were no rains during the planting season. However, on account of dry spell there have been no instance of pest attacks so far, Mr Nath said.
According to a Government official, the likely shortfall in production could be offset by a possible improvement in cotton productivity where Bt cotton is cultivated. Bt cotton is cultivated in Gujarat, Maharashtra and southern States.
Another official said Mahyco Monsanto Ltd, the company authorised to distribute Bt cotton seeds, has released one lakh packets (450 gms each) for planting. This would cover an area of one lakh hectares on the presumption that all of these have been used by farmers. According to him, farmers in some areas were reluctant to buy Bt cotton seeds because of the price of Rs 1,600 per packet.
While the cotton crop in northern States was impacted by the dry spell, the crop may enjoy better prospects in the South where plantings are on.
In Maharashtra, acreage is likely to be down by 15 per cent. So far, 25.75 lakh hectares have been brought under cotton cultivation from the annual average of 31.48 lakh hectares.
``Because of dry spell, the areas that did not come under cotton are likely to be brought under short-duration crops as moong and urad,'' said an official of the Maharashtra State Cotton Growers' Marketing Federation. The State's cotton output is estimated at 27 lakh bales.
However, Maharashtra is faced with yet another issue non-payment of dues to cotton farmers. The federation, which is responsible for implementing the cotton monopoly procurement scheme, is yet to pay the last instalment aggregating to Rs 500 crore to the farmers.
During the 2001-02 season, the federation procured 22.28 lakh bales.
During the ensuing 2002-03 season, the federation is planning to procure 12 lakh bales on guarantee price set by the Centre. ``We want to restrict our procurement to 12 lakh bales this season and may go up to 20 lakh bales only if mandated,'' a federation official said.
There is a slight relaxation in the monopoly scheme.
Ginning mills that have been modernised are allowed to buy directly from growers, so has CCI been.
This has opened up an additional outlet for the farmer.
As of now, the federation hopes to liquidate its cotton stocks to fund the payment of cotton farmers.
``Cotton prices appear to be firming up because of improved demand,'' the official said.
Worldwide, cotton area is expected to be down five per cent at 319 lakh hectares, according to estimates by the International Cotton Advisory Committee.
Global cotton production is expected to decline by 22 lakh tonnes to 192 lakh tonnes in 2002-03 while world consumption is expected to rise by 2.5 per cent to a new high of 206 lakh tonnes.
The country's cotton production during the 2001-02 season (October-September) was 155-158 lakh bales.
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