The Hindu Business Line : Pawar, Vaghela to discuss decline in cotton prices

THE decline in cotton prices and steps to prop it up will be discussed in detail at a meeting between the Union Agriculture and Food Minister, Mr Sharad Pawar, and the Union Textiles Minister, Mr Shankersinh Vaghela, in New Delhi on Wednesday.

However, the Government could stop short of asking the Cotton Corporation of India (CCI) from intervening in the market to help buoy the prices, sources in the know of the development said.

"A meeting of all those concerned with cotton sector was called by the Agriculture Secretary, Ms Radha Singh, today. The inputs of the meeting will be carried forward for tomorrow's meeting," the sources said.

Cotton trade sources said the Government has been told that there was "needless panic" with regard to fall in prices. "We have told Ms Singh that there is no cause for panic and things will improve," they said.

Officials of the spinning mills, when contacted, declined comment saying they did not want to pre-empt any decision that would be taken at Wednesday's meeting.

However, Mr Pawar has been quoted by news agencies as saying that he would urge Mr Vaghela for market intervention by CCI, which he heads.

The sources in the know, on the other hand, said the Government may buy time to "wait and watch" the situation unfolding on the price front. "There are reasons for it. There was a 15-day period of shravad during which many mills refrained from buying. Now that it is over, the mills are expected to resume buying," the sources said.

Cotton prices have declined sharply since the beginning of this month on projections of record crop in the country and globally. While domestic production is seen at a record 213 lakh bales (of 170 kg), global output is estimated at 23.51 million tonnes.

As a result, prices have fallen below the minimum support price (MSP) announced by the Government this year. MSP for grades such as F-414 is Rs 1,760 a quintal, while for H-4 it is Rs 1,960.

Going by this, varieties such as F-414, J-34 should fetch about Rs 17,900 a candy (of 355.62 kg), whearas grades such as H-4, shankar-6 should get Rs 19,900. However, prices have declined to Rs 15,908 for J-34 and Rs 17,800 for Shankar-6.

In fact, prices for Shankar-6 have recovered after falling to Rs 17,500.

"This shows that prices have begun to look up and will rise as mills have begun to procure with the onset of Navratras," trade sources said.

The Indian Cotton Mills Federation, the apex body of spinning mills, has opposed any move to operate MSP. "It will not encourage efficiency and productivity," it has told the Government.