The Hindu Business Line : New challenges ahead in bumper cotton season

COTTON crop area and the output during 2004-05 (October-September) are expected to add on challenges to the domestic textile industry in marketing their final products.

Added challenges since the current cotton sowing pace indicates another bumper crop for the coming year, estimated to go up by 15 per cent in crop yield and 12 per cent by area over the current year's 165-167 lakh bales and 12.40 million hectares. The higher crop projected for next year will also coincide with the complete lifting of quantitative restriction based global textile trade.

According to informed sources with the leading cotton/cotton yarn trade here, favourable cotton sowing conditions prevailing right now across the northern and western regions have already started sending signals on sobering cotton prices that are likely in the coming season.

The early monsoon seen this time will also precipitate early arrivals of the new crop, which according to market sources, will hit the primary markets from September-end.

The sources told Business Line that already 90 per cent of sowing was over in the canal irrigated cotton tracts of Punjab, Haryana and Rajasthan. While at least 30 per cent of the area has been sown in Gujarat which had extensive rains this time around, sowing has been satisfactory in Madhya Pradesh as well. The trade and industry put the cotton acreage for 2004-05 at 14.01 million hectares against current year's 12.40 million hectares.

Higher cotton crop size is largely due to increased sowing of Bt cotton seeds and according to trade estimates, this year a large quantity of uncertified Bt cotton seeds from Gujarat and Tamil Nadu origin are reported to have found their way into Punjab and Haryana farms. The sources claim that 50 per cent of cotton seeds sowed in Punjab are of Bt cotton variety and in Haryana it is estimated to be around 20 per cent.

The cotton trade sources here maintain that considering the softening prices likely during the new crop season, the ginners and the trade have already moved to offer contract for mills at the price band of Rs 22,000-22,500 per candy for Shankar-4 of Gujarat and MP cotton varieties for September mill delivery.

With the easing price situation for the domestic cotton and the likely relaxation on the fiscal front for textiles through Government intervention in the issue of Cenvat duty structure on one side, and the prospects of a higher cotton output from China, the country's competitor in world textile trade on the other, the textile sector's fortunes both within the country and on the export front may be poised to have many challenges, the sources say.