Agri Business

Cottonseed companies warn of shortage on price cuts

KV Kurmanath Hyderabad | Updated on March 08, 2018 Published on March 08, 2018

Apex seed body says government should consider a price hike on higher input costs

The National Seed Association of India (NSAI) has asked the Union Government not to reduce the cottonseed price for the upcoming kharif season.

Instead, the seed industry deserves a price hike, considering significant hike in the cost of production, it contended.

Any reduction of price could lead to severe shortage for the seeds as it is not viable to produce the seed at that rate, it felt.

Trait value cut

A committee set up by the government recommended a reduction in the Bollgard-II cottonseed price by ₹60 to ₹740 on a packet of 450 gm. The recommendations are more likely to be accepted by the Centre.

While the seed value is reduced by ₹50, the trait value is pared by ₹10 to ₹39 .

The committee was set up in 2015 after the Centre brought in the Cottonseed Price (Control) Order to regulate the cotton seed price. It had kept the price unaltered last year.

For this year, it, however, suggested a reduction to give a relief to farmers who suffered heavily in several areas.

Citing news reports, the association wrote a letter to Shobhana Kumar Pattanayak, Secretary, Union Ministry of Agriculture, appealing for a raise in the seed price.

The association argued that there is no reason to reduce the seed price as the price of the fibre has been going up in the last few years.

The association represents over 300 small and big seed firms in the country. Its members has a majority share in the ₹15,000-crore seed industry.

‘Cotton price up’

“The minimum support price for cotton went up to ₹4,320 a quintal in 2017 as against ₹3,000 in 2011. On the other hand, the cost of production has gone up significantly,” the letter said.

Cottonseed prices have dropped drastically in the past few years, but fuel, labour, chemical and supply chain costs have risen sharply, squeezing margins of most seed makers.

For one, the minimum wages for labour went up to ₹342 in 2017 from ₹176, resulting in an increase in the cost of production. Any hike in the seed price could lead to a dip in production in the future, triggering a shortage for the seeds.

“We request you to increase the seed value of Bollgard-II cottonseeds considering the increase in costs. Also, there is a need for equalising the prices of Bollgard-I and Bollgard-II seeds to encourage the production of the former seeds,” the letter said.

If the prices are equalised, it will help in removing monopoly of the trait developer and save costs to the farmers as BG-I didn’t attract any trait value.

Published on March 08, 2018

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