G. Gandhi, a farmer near Kuppam in Andhra Pradesh, is all smiles when he says silkworm cocoons fetch better prices in the market these days.

Last week, Gandhi sold the cocoons, raw material for silk, at Rs 300 a kg. Six months ago, he was selling it for just Rs 150. “Despite the steep increase in price, there is good demand in the market,” he says.

Many farmers in the Andhra Pradesh-Karnataka border grow mulberry as inter-crop with chilli or capsicum. As silkworms feed on mulberry leaves, most of the farmers are also engaged in silkworm culture and are today reaping decent profits, says K. Mallikarjuna Rao, an aggregator in this area.

But around six months ago, farmers did not get a good base price from reelers who reel raw silk from the cocoons . So they have been forced to increase prices; otherwise it would have become unprofitable for them, says K. Sivakumar, Managing Director, RmKV, a silk sari boutique in Chennai.

Supply-demand

The demand-supply gap is another reason for the climbing prices. Mulberry cultivation has been hit, due to the failure of the North-West monsoon in Karnataka and Tamil Nadu.

With cocoon prices spiralling, the price of raw silk too has gone up. Silk prices have risen around 15 per cent over the last three months, from Rs 2,400 to Rs 2,800 a kg, on an average. All this has had its ripple effect on the retail prices of silk saris.

So much that when home-maker Sita Narayanan placed a customised order at a popular silk sari store in Chennai, she was in for a surprise. She was told that the price of her sari could go up if silk price increases during the time it takes to make the sari.

retail front

“With silk prices climbing steadily, I was told not to expect any guarantee on the final retail price. With my daughter’s wedding round the corner, I don’t have a choice,” says the 55-year-old.

About two months ago, RmKV hiked retail prices of its silk saris by 5-7 per cent. Despite this, RmKV says there is good demand for silk saris, especially during weddings and festivals.

Kamal Tandon, COO, Nalli Silks, says Nalli has not hiked retail prices. “This may mean taking a hit on margins, but we are not looking to hike prices. Even 1.5 years ago, silk prices were up to Rs 4,000 a kg before falling to Rs 2,000. Prices will fall again, but one cannot really predict when that will happen,” he says.

swetha.kannan@thehindu.co.in

(This article was published on April 18, 2013)
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