2015/16 cotton acreage seen down by the most in 13 years

Reuters | | Updated on: Dec 06, 2021

Farmers harvest cotton in a field in Nana Viramgam village in the western state of Gujarat, India, in this February 9, 2015 file photo. Cotton acreage in top grower India is likely to drop by the most in over a decade this year, as plunging prices and fears of a drought prompt farmers to switch to cultivating pulses in the hope for better returns, a top trade body official said. REUTERS/Amit Dave/Files | Photo Credit: AMIT DAVE

Cotton acreage in top grower India is likely to drop by the most in over a decade this year, as plunging prices and fears of a drought prompt farmers to switch to cultivating pulses in the hope for better returns, a top trade body official said.

Lower output at the world's No.2 cotton exporter after the United States should help give legs to a recovery in global benchmark prices that have risen 13 per cent from a five-year low of 57.05 cents per pound plumbed in January.

In India, cotton prices have been languishing.

They fell below state-set rates after top buyer China curbed imports in 2014 to support its own farmers, while prices of summer-sown pulses like black matpe, green gram and pigeon peas have gained more than a third in six months as poor rains trimmed output last year.

"Since other crops are giving better returns, we may see a drop of around 7 per cent in cotton acreage," said Dhiren Sheth, president of the Cotton Association of India (CAI). That will be the steepest fall since 2002/03.

Forecast for this to-be-India's-first-drought-year since 2009 is also encouraging farmers to switch crops.

"Cotton is not paying well. And if the rains fail then I will lose more," said Ashish Pawar, a cotton farmer in Maharashtra, who plans to divert four acres of his land to cultivate pulses this year.

The shift to growing pulses, a key part of the Indian diet, will help Prime Minister Narendra Modi contain food prices in a year when monsoon is likely to deliver 88 per cent rainfall of the long-term average.

"With a recent rally in soyabean prices, farmers could also plant soybeans at the cost of cotton," said Dinesh Shahra, managing director of Ruchi Soya Industries Ltd.

This would further drag on cotton acreage, which was at a record 13 million hectares in the previous season when India produced 39 million bales.

The government has said it expects exports to fall 41 per cent in the marketing year ending September to 7 million bales, the lowest since 2008/09.

"Many farmers don't have money to buy cotton seeds and there is no indication of revival in demand from China," said a cotton exporter in Gujarat. "So obviously farmers will shift to other crops and surplus for exports will shrink."

The weak outlook is reflected in shares of cotton seed producers Kaveri Seed Co and Monsanto India that have dropped about 6 per cent and 9 per cent, respectively, this month.

Published on June 10, 2015
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