By Our Special Correspondent
MUMBAI, NOV. 01
To avert the crisis, in the current season, the Indian Cotton Federation has called upon Prime Minister, Mr. Narendra Modi to prevail upon Cotton Corporation of India (CCI) to procure minimum 100 lakh bales of cotton maintain stability in the cotton market and later sell the cotton directly to the consuming Mills only. This would help in a big way to maintain a stable cotton prices throughout the year and create a win-win situation to Indian cotton Farmers and entire Textile chain, stated Mr. J. Thulasidharan, President, ICF, in a memorandum submitted to Prime Minister.
To strengthen the raw material security and competitiveness of the spinning industry, Mr. Thulasidharan also urged the Prime Minister to advice the commercial banks to finance the spinning mills to procure cotton for 9 months requirement at 7% interest and 15% margin under Nabard Agri Finance. This would further strengthen the textile industries competitiveness, sustainability and growth which would help India to achieve the targeted Textile exports and employment growth, he added. Briefing the Prime Minister of the Indian cotton scenario, Mr. Thulasidharan informed that for the 3rd consecutive years, India has retained its position as world’s largest producer of Cotton. The good Cotton prices prevailed during last 3 years and poor remunerative prices from alternative crops, had encouraged the Indian Farmers to grow more cotton.
During the cotton season 2017-18 due to 20% increase in acreage and favourable climatic condition, an all time highest cotton production of about 400 lakh bales is expected. As per International Cotton Advisory Committee (ICAC) latest report, a similar situation is expected in other cotton growing countries, resulting in 75% surplus cotton globally for the year 2017-2018.
The current Cotton season began in October 2017, and peak arrivals are expected between November 2017 till the end of February 2018. During this period, about 70% of the cotton is brought to the market by the farmer. The value of the cotton would be approximately Rs.58300 crores. During last year, the ginning factories have made losses and were facing liquidity crisis.
Similarly, the spinning Industry is also facing serious liquidity issues. Due to the oversupply in domestic and global markets and due to the liquidity issues, there would not be sufficient buyers in the Indian market which would affect the Indian cotton Farmer very badly due to very low prices for their produce, he informed. Boosting cotton exports, ICF President said, by incentives or other means would only bring negative impact.
Since, it will bring down global cotton prices, which would further affect the domestic market prices and also increase in import of cotton. Further our competing countries would benefit cheaper cotton in the international markets affecting value added textile export and domestic employment in the textile sector. The Indian cotton prices prevail below the international prices, during first half of the cotton season, when farmer market their produce. During this period substantial cotton exports happen, financially strong spinners, traders and multi national companies cover huge quantity.
During the second half of the season cotton prices start moving upward and remain above international prices due to excess export and also hoarding by the traders and multi national Bumper cotton crop affecting farmers Continued from Page 1 Col 6 companies, who market their cotton at later part of the year at a much higher rate. So neither of the majority of the Farmer, nor the majority of the spinning Mills gain the benefits, Mr. Thulasidharan pointed out.
The cotton seed market, he informed, is also very low due to poor oil seed demand, the prices are already in downward trend. The 20% excess supply of cotton seed would further bring down the prices and adversely affect the kapas prices to the cotton Farmer. The situation is quite alarming for the cotton Farmer and the Government’s immediate intervention only could save a serious crisis, which is likely to erupt with a big cotton crop.
In view of the fore going, India will have a record crop of 400 lakh bales this year and with mill consumption will be round 300 to 310 lakh bales. Hence to support the Farmers sustenance in cotton and our Prime Ministers Make in India initiative, to double the income of farmers, Cotton Corporation of India should be advised to act as a voltage stabilizer for prices and procure around 100 lakh bales during the peak season time and make it available for the consuming Mills during the non season time.
This would stabilize prices for the benefit of the Farmers across Gujarat, Maharashtra, Telangana, Andhra Pradesh and few more states with a monitoring mechanism to see that cotton prices to the Farmers do not dip and is around MSP. This kind of intervention is also aligned to State Government and Central Government policies like Make in India, the states like Telangana, Gujarat, Maharashtra, and Andhra Pradesh textile policies for more job creation in India as raw material is available for Indian Textile Industry in off season, he said.
The Indian Textile Industry on its part would continue to invest and enhance cotton consumption to make more value addition, employment and offer farmer remunerative prices for their produce. By the above, our cotton farming will give employment to more people a possibility, export of value added goods will create in flow of foreign exchange and last will attract more FDIs.
The Commercial Banks finance the spinning Mills up to three months of the cotton requirement, restricting the Mills to cover only a portion of their annual requirement. Multinational cotton traders who have access to cheap interest rates (at 3%) cover substantial quantity of cotton during peak arrival period and sell to mills later when the prices skyrocket due to hoarding and excess exports, he added. (Source: Tecoya Trend)