The Hindu Business Line : Market intervention to hold prices — Procurement may cost Cotton Corp Rs 325 cr

STATE-owned Cotton Corporation of India Ltd (CCI) is likely to suffer losses in excess of Rs 325 crore in the current year for protecting cotton farmers' interests at a time when both global and domestic production has peaked and prices have plummeted.

"We we have been buying 35,000 to 45,000 bales per day since the cotton season began and hope to end the year with purchase of 25-30 lakh bales," CCI Chairman and Managing Director, Mr Subhash C. Grover, said here on Friday.

The largest chunk of CCI's procurement is expected to take place in Gujarat, where the Corporation has already bought three lakh bales (of 170 kg) and expects to buy a similar quantity in the coming months. The losses from the MSP operations in Gujarat alone are likely to top Rs 70 crore.

"We would like to assure the farmers that we will keep buying till the last day (of the season). Even if we are offered cotton in June, we will buy. Thanks to our efforts, we have not let the cotton prices fall below the MSP anywhere in the country. I agree that the per-quintal realisation is much less than last year, but it will be made up due to the better yield and the farmers will not suffer any financial loss," Mr Grover said.

While yields have jumped from 8-10 quintals per hectare last year to as high as 28 quintals per hectare, market prices have slumped from Rs 2,800 a quintal to less than Rs 1,800, depending on the variety of cotton. "Had it not been for our intervention, prices would have gone below Rs 1,600 a quintal," he added.

Cotton prices have been depressed in the current procurement season, thanks to a nearly 20 per cent increase in production. While the world crop size is expected at 24.5 milliontonnes, India will produce nearly 213 lakh bales of cotton in the current year.

Mr Grover said that the Corporation had started exporting and sold 1,700 bales on February 2. It had sold another 800 bales in the last couple of days and with international markets turning slightly favourable, exports were likely to pick up, especially to the Far-Eastern countries and China. "While we suffer a loss even on exports because of lower prices in the international markets, we find that whenever we export, domestic prices firm up. That helps the farmers. We get a subsidy of Rs 1,000 per candy (355.56 kg) from the Government for exports," he said.

Mr Grover claimed that between seven and ten lakh farmers, out of which 1.15 lakh were in Gujarat alone, would have already benefited from the MSP operations of the Corporation.

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