Cotton procurement to begin October 15 as lower yield likely to push prices up

Cotton holds an important place in the farm economy of Maharashtra, particularly Vidarbha. When the crop fetches a good price, farmers look relieved and the effect is felt directly in the market. This year, however, the situation is different. Rain has played truant, and cotton growers are worried.

The condition in the Nagpur division is reported to be fairly good, but the situation in the Amravati division is said to be serious. For this reason, cotton output is feared to fall by 20 to 25 per cent this time. Government figures are yet to come out, but private estimates clearly show a shortfall. If output is lower, cotton prices in the market may rise, but it is not certain that farmers will get the benefit as they expect.

According to cotton traders, last year cotton fetched a maximum of Rs 7,400 to Rs 7,500 per quintal. This time the rate is already above Rs 8,600 per quintal. In the coming days it could cross Rs 9,000, and the cotton rate this year could go even above Rs 9,500 per quintal.

Farmers will certainly gain somewhat from higher prices. But growers in drought-affected areas could suffer a heavy blow because of the lower yield. The rate now available in the market is higher than the minimum support price (MSP) announced by the Centre. This year the Centre has fixed the MSP for cotton in three slabs, Rs 8,567, Rs 8,617 and Rs 8,667. These rates apply to cotton from 27.5 mm to 29.5 plus mm staple length. Traders said the cotton arriving in the market these days has a high moisture content.

Experts in the sector say that the state produced about 115 lakh bales of cotton last year. This year the output is estimated to fall to 90 to 95 lakh bales. The crop was hit by rain early on and is now being damaged by intense sunshine. The impact is most visible in Vidarbha and Marathwada. If production falls short by a full 20 lakh bales, farmers are feared to suffer a heavy financial blow.

As per a decision taken at a Centre-level meeting, the Cotton Corporation of India Limited (CCI) will open 179 procurement centres in Maharashtra in the first phase. Of these, 96 centres will be in Vidarbha. The CCI has also kept ready plans to open more centres if required, depending on market conditions.

However, with market rates higher, officials believe farmers may go to private traders to sell their cotton. Instead of selling to the CCI at the MSP, farmers may lean towards taking advantage of the higher market price.