Agri Business

Govt plans strategic cotton reserve to secure supplies

Our Bureau Chennai | Updated on March 12, 2018


In a bid to bail out the textile industry, the Government plans to build a strategic reserve of cotton to secure supplies for mills. The reserve will ensure raw material supplies to mills and help stabilise prices in times of shortage.

According to a proposal by the Textile Ministry, State-run Cotton Corporation of India (CCI) will be directed to build up a reserve of 2.5 million bales (of 170 kg each) of cotton till the cotton arrivals begin for new season. CCI is likely to procure around 10 lakh bales a month from growers for the next two months at market prices instead of minimum support prices, thus making the proposal attractive to farmers too.

“This (the cotton reserve) comes as a boost to us at a time when we are suffering because of labour issues, burdened by debt and intense competition from exporters to secure the raw material. Cash-strapped Indian mills lose out the most when raw material prices zoom and unbridled exports trigger irrational price hikes,” said Mr P.D. Damodaran, former Chairman, The Southern India Mills' Association.

Good concept

“Having a buffer like this is a good concept which will enusre a proper ending-stock. At least on the raw material front, textile mills can remain worry-free. Moreover, this seems to be a good proposition for farmers also, since they sell their produce at market price,” said Mr D.K. Nair, Secretary-General, Confederation of Indian Textile Industry.

To firm up more accurate details of the commodity, the Government has framed a draft legislation to collect accurate data on cotton production and stock availability with various stakeholders of the industry. The proposed Bill seeks to ensure well-structured supply chain for cotton, textiles and facilitate better management of statistical data collection for more effective planning and policy formulation.

Our Delhi Bureau reports: The decision has been necessitated because of the slowdown that has led to mills not having the wherewithal to hold stocks for beyond 15 days. On the other hand, the opening stock requirement for the new marketing year from October works out to 60 lakh bales assuming 85 per cent efficiency.

“This considered decision has been taken to ensure price stability in the market as also availability of cotton for domestic user industry, keeping in mind the varied interests of stakeholders across the entire cotton value chain, ranging from farmers, ginners, millers and traders,” an official statement said. On Tuesday, CCI purchased around 11,000 bales at Rs 4,400 per quintal from major mandis across Gujarat.

“Although, currently the cotton prices are stable, averaging around Rs 4,000 a quintal, it is way above the Minimum Support Prices fixed at Rs 3,100 quintal, negating the need for MSP operations,” it said.


Published on April 04, 2012

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