The Hindu Business Line : Vaghela no to lowering cotton support price

The Union Textile Minister, Mr Shankarsinh Vaghela, has rejected the demand of the cotton ginning and pressing units for lowering the minimum support price of cotton and assured the cotton growers that every bale of cotton produced by them would be purchased by the Cotton Corporation of India (CCI).

Reiterating the UPA Government's "pro-farmers policy", he told a press conference here that the cotton growers would not require resorting to distress sale this year as the CCI had been directed to purchase every bale of cotton on offer, irrespective of who would buy it from CCI.

DEMAND SLOWDOWN

Admitting that the current economic slowdown globally and the resultant closure of many textile mills had depressed the demand for cotton, he said even if the CCI was forced to stock all the cotton in the warehouses for want of buyers, the government would not allow the farmers to suffer.

The MSP for cotton fixed at Rs 2,850 a quintal for the best variety was about 40-48 per cent higher than the price fixed last year.

The prices had appreciated by about 40 per cent last year after the stocks were sold by the farmers.

GINNERS STRIKE

Rejecting the demand of the private ginning and pressing factory owners, Mr Vaghela said they had made hay last year when the prices went up in the international market and should not be objecting now if the farmers reap the benefit this year to make up for the losses last year.

All the ginning and pressing factories in Gujarat, which accounts for about 30 per cent of the cotton produced in the country, are on strike for the last two days demanding lowering the support price for the farmers.

GINNERS LOSE

The factory owners have claimed that due to high support price offered by the CCI, the textile mills preferred to import cotton at lower prices and the ginning and pressing factories had lost heavily in business.

Mr Vaghela, however, said he had advised the Union Finance Ministry to instruct the banks to provide loans to the ginning and pressing factories for modernisation at the differential rate of interest of seven per cent as applicable to the farmers.

SOVEREIGN GUARANTEE

In order to provide support to the CCI in its mission to come to the aid of the cotton-growers, his ministry has requested the Prime Minister, Dr Manmohan Singh, to provide Rs 10,000 crore of "sovereign guarantee" to the CCI to enable it to raise the necessary amount from the market as and when needed.

The CCI had already arranged for Rs 5,000 crore and there would be no shortage of funds to provide the support price to the farmers. The cotton production in the country is expected to increase from 300 lakh bales last year to 322 lakh bales this season. The CCI had already purchased 13 lakh bales so far from different cotton-producing states, including about one lakh bales from Gujarat. It had opened 280 MSP centres in the country, including 48 in Gujarat, and was making purchases at a rate of 1.5 lakh bales a day.

AREA RISES

Between 2003-04 and now, the area under cotton cultivation had increased from 76 lakh hectares to 93 lakh hectares this year, production from 179 lakh bales to 322 lakh bales and the productivity from 399 kg a hectares to 591 kg, although it was still below the world average of 782 kg a hectare.

India had become the second largest producer of cotton in the world after China, relegating the United States to the third place, and had also emerged as the second largest exporter of cotton in the world. However, in the current year, the cotton export was likely to reduce from 85 lakh bales last year to 75 lakh bales due to depressed demand in the international market, he said.

Additionally, Mr Vaghela said, he had also requested Dr Singh for an immediate additional sanction of Rs 565 crore to the CCI to purchase cotton from the open market and another Rs 1,500 crore as advance preparations for the next cotton season if required.

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