The Cabinet Committee on Economic Affairs (CCEA) on Wednesday attempted to help the troubled cotton sector which had been adversely impacted in 2014-15 by both lower production and prices, and stifled exports in two ways.

First, it gave the approval for Maharashtra State Co-operative Cotton Growers Marketing Federation Ltd to undertake minimum support price (MSP) operations as a sub-agent of the Cotton Corporation of India (CCI).

Additionally, the CCEA also gave its assent to additional allocation under the Non-Plan Grant to meet anticipated losses to the CCI and the Maharashtra coop which procured cotton at the MSP this season even as market prices slid below the minimum price threshold.

"This decision will help in price support operations of 110 lakh bales (100 lakh bales by CCI and 10 lakh bales by MSCCGMFL) during the current cotton season 2014-15 to help stabilise cotton prices and alleviate farmer distress. This operation is primarily aimed at safeguarding the interest of the farmers and avoiding any distress sale," said an official statement.

The MSP for cotton was fixed at Rs 3,750 for medium staple and Rs 4,050 for the long staple variety for the current year.

The Centre had earlier lowered its estimate of cotton output to 390 lakh bales (of 170 kg each) from 400 lakh bales due to untimely rains and hailstorms across key cotton-growing belts.

The Cotton Advisory Board has forecast exports reducing sharply to 70 lakh bales this season as compared to 117.9 lakh bales in 2013-14, particularly due to China scaling back services.

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