Centre to procure cotton if prices fall below MSP, say officials

Wide gyration in prices: The mandi prices of Bt cotton in Sri Karanpur rose to ₹9,450/quintal, this year’s peak, on November 12 and slid to a low of ₹7,800 on December 20 and ruled at ₹8,450 on December 21.

The Centre is keeping an eye on open market prices of cotton across States, which are currently ruling higher than the minimum support prices (MSP) for the current season. In case, prices fall below the MSP, we’ll “immediately” start procurement operations, officials have said.

“Right now domestic prices are higher than the cotton MSP across States. MSP operations will kick in if prices fall. At this point, it is not necessary. But we are fully ready to start procurement at MSP if the situation warrants. It would be immediate,” an official tracking the matter told businesslie.

The MSP for 2022-23 cotton year (October-September) is fixed at ₹6,080 per quintal for medium staple. The average cotton mandi price in all major cotton-producing states is way above that. But there is a major fluctuation and prices in most States have declined during December 1-21 compared with November, according to the Government data.

For instance, mandi prices of Bt cotton in Sri Karanpur rose to ₹9,450/quintal, this year’s peak on November 12 and slid to a low of ₹7,800 on December 20 and rose to ₹8,450 on December 21.

Unusual fluctuation

“I have already sold half of my cotton this year and on average, I received ₹8,500/quintal. As the mandi prices are fluctuating a lot this year, as much as ₹1,000/quintal in a day, I hope to sell my remaining stock at ₹9,000/quintal. I hope it will go up to that level. Not sure about the reason for this fluctuation, but it is unusual and never seen before,” said Sukhvinder Pal Singh, Sri Karanpur in Ganganagar district of Rajasthan, who harvested about 600 quintals of cotton this year.

In Madhya Pradesh, average cotton mandi prices were ₹8,376/quintal in November but it declined to ₹7,869/ quintal in December (1-21), according to data compiled by Agrimarket portal. There was some decline in average prices in December compared to November in Telangana, Haryana, Gujarat, Maharashtra and Rajasthan as well, while in Punjab it remained almost at the same level.

Some cotton farmers’ associations have been making a case with the government for higher MSP for cotton on the ground that cost of production had increased. The government, however, is yet to respond to the request.

Cotton production in 2022-23 season is estimated at 339.75 lakh bales, per revised estimates released by the Cotton Association of India earlier this week. The latest projection is about 4.25 lakh bales less than what was initially projected. The total cotton production in the last season is estimated at 307.05 lakh bales.