Agri Business

Cotton growers seek 50% more than MSP

KV Kurmanath Hyderabad | Updated on October 19, 2021

Farmers fear prices may drop post-Diwali, want cover for low yield

Even as prices of raw cotton (kapas) are ruling far higher than the minimum support price (MSP) fixed by the Centre for this year, rates in different agricultural markets across the country are hovering over ₹7,500 a quintal. The rates are ruling high on demand for the natural fibre increasing in the global market.

Low output, supply

Against the MSP of ₹6,025 (long staple) and ₹5,726 (medium staple) a quintal, the modal price (rate at which most trades took place) of raw cotton was quoted at ₹7,400 at the Khammam (Telangana) marketyard on Monday with quality offerings fetching as high as ₹7,711. In other markets too, rates were higher than ₹7,300.

Fully pressed bales of quality cotton were traded at ₹63,600 a candy (356 kg) in Raichur, Karnataka, on Monday. The kapas or raw cotton prices were traded at ₹8,300 per quintal in the Raichur region, where there’s good quality arrivals.

In Gujarat, the Shankar-6 variety, a benchmark for exports, ruled at ₹60,500-61,000 per candy. On Intercontinental Exchange, New York, cotton futures ruled at 105.76 cents a pound (₹63,025 a candy). Prices are at 10-year high on lower production, restricted supply and supply issues.

Despite these developments, farmers in Telangana and Gujarat are demanding 50 per cent more than MSP. “We demand ₹9,000 as per the recommendations of Prof. M S Swaminathan panel’s recommendation. We have submitted a memorandum to the Cotton Corporation of India, demanding a higher price,” Shobhan Mood, Joint Secretary, Telangana Rythu Sangham, told BusinessLine.

S Malla Reddy, a leader of All-India Kisan Sabha (AIKS), said high prices will not sustain after Diwali. “Currently, arrivals are very low at about 5,000 bags a day. When arrivals surpass 20-25,000 bags a day after two weeks, prices will drop,” he said.

The area under cotton has dropped sharply in Telangana this year. From about 24.30 lakh hectares (lh) last year, the area has dipped to 18.60 lh, far lower than the State Government’s target of 28.30 lh.

Gujarat situation

Farmers in Gujarat are more concerned about the crop condition following the recent monsoon-related floods and water-logging. The crop condition in key-growing regions of Saurashtra and North Gujarat remains a cause of concern.

“The yield has slipped from an average 100-120 kg per acre by more than half to around 40-50 kg. With such a reduced yield, we don’t find even the current rates of around ₹7,500 a quintal as remunerative,” said Vitthal Dudhatara, a farmer leader from Saurashtra.

Though cotton production will be hit due to recent rains, the output will increase in the long-term, trade sources said. The cotton industry expects cotton picking to increased to three or four from the earlier 2-3 pickings.

“With recent rains in part of Maharashtra and Telangana, arrivals of quality kapas or raw cotton are yet to pick up from those regions, while the demand from mills is on the rise. As a result, most of the mills are buying from regions around Raichur,” Ramanuj Das Boob, a sourcing agent for both domestic mills and multinationals, said.

Maharashtra procurement

Cotton procurement in Maharashtra will start on November 1. Even as farmers are expecting high prices for the produce, market observers said that the quality of cotton that will come to the market this season might not match the normal standards.

Agriculture analyst Sominath Gholwe said that cotton cultivation in Maharashtra has been hit by pink bollworm and red bugs. “Cotton cultivation this season has dipped in Maharashtra. More and more farmers have turned to soya cultivation. Also, chana cultivation has gone up,” he said.

According to the State government, cotton sowing in the current kharif season was done on 39.37 lakh hectares compared with 42.08 lakh hectares last season.

(With inputs from Vishwanath Kulkarni in Bengaluru, Radheshyam Jadhav in Pune and Rutam Vora in Ahmedabad)

Published on October 18, 2021

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