The Hindu Business Line : Agony of the cotton farmer

COTTON GROWERS ARE in dire straits. Record arrivals, poor offtake at the marketing yards and plummeting prices are threatening to hit them where it hurts most — their income. In the last three months, the market for major varieties such as Shankar-6 and J-34 has dropped continuously. The Government has conceded that kapas (seed cotton) prices are about 28 per cent lower than they were a year ago. Cotton growers have produced a record crop, of 213 lakh bales (170 kg each), a fifth higher than the peak of 177 lakh bales last year. Fall in prices was inevitable and foreseeable even in October.

Given the massive crop size, intervention plans should have been in place well in time. The support price operations by the Cotton Corporation of India (CCI) have been ineffective and, indeed, were late to start. To date only six lakh bales have been procured. Despite prior knowledge of the emergent market conditions, the Government has done precious little to arrest distress sales. At least two Union Ministers — Agriculture and Textiles — in separate statements talked of government intervention to arrest price collapse. They also spoke about an export drive by granting WTO-compatible subsidies. It has been clear for a while that without some kind of financial assistance, exports would not be feasible as globally too prices are depressed following record crops in major origins and the world consumption demand trailing supplies. Yet, no concrete step to support growers has been announced. With each passing day, the situation can only get worse.

Now comes the report that the Commerce Ministry has rejected the Textile Ministry's proposal for a Rs 100-crore subsidy. Growers have become the unfortunate victims of lack of coordinated decision-making among various Ministries — Agriculture, Textile, Commerce and Finance. Cotton textile mills, as can be expected, had no qualms lobbying against financial support for exports. The mills — actual users of the fibre — are waiting for a further fall in rates; the same goes for traders. For them the import route is still open. There is perhaps a case for raising the Customs duty on cotton import from the low 10 per cent level. Export assistance granted after the crop is marketed will benefit trading houses, not growers. The goings on in the cotton market raise suspicion about the intention of the policy-makers, on the one hand, and mills and traders, on the other. The behaviour of the latter is understandable — profit motive drives their commercial decision. Worse is the Centre's laxity. Since assuming office eight months ago, the United Progressive Alliance has not tired of talking about its commitment to farmers, but its action leaves much to be desired. There are reports of traders buying from hapless farmers at depressed prices — that is, below the minimum support price — and surrendering to the CCI at support price, and making <243>money.