Yavatmal cotton fetches up to Rs 9,600 a quintal even as rain cuts yields

Erratic rain in Yavatmal this year has badly damaged farmers' cotton crop. Even so, cotton prices in the market have risen sharply. Irregular rain stunted the growth of the crop, and bolls and leaves dropped. In the market, the price of "white gold" has reached Rs 9,600. Good-quality cotton is fetching up to Rs 9,600 a quintal from private traders. The rains arrived late this year, so sowing was also delayed.

Farmers and traders are now watching whether, if the market's upswing continues, the price of cotton will reach Rs 12,000.

When the rain turned its back, cotton growth suffered. Lack of water stunted the plants, and bolls and leaves fell. As a result, even in irrigated fields, cotton yield is feared to be limited to four to five quintals an acre. Farmers who depend on rain for cultivation are worse off. They worry whether they will get even one to two quintals of cotton an acre. With a steep fall in yield feared, the arrival of raw cotton in the market is expected to be low. If demand holds and supply falls, cotton prices could rise further.

With the likelihood of a shortage of cotton, ginning factory owners and traders have begun scrambling. Prices of raw cotton are reported to have crossed Rs 9,000. To secure cotton, traders are reaching the edge of farmers' fields directly. This effort to buy cotton from the fields is likely to increase competition in the market. Where prices go next will depend on cotton arrivals and market demand, so farmers' eyes are on market rates.

Compared with the past three to four years, farmers now hope to get Rs 10,000 to Rs 13,000 a quintal for cotton this time. For farmers living under the shadow of drought, rising prices could bring some relief. But the real question is how much benefit this upswing will bring if the yield itself has fallen sharply because of the rain. Cotton prices are likely to reach the Rs 10,000 mark, yet farmers will get the direct benefit of higher prices only if they have enough cotton to sell.

The Centre has announced a minimum support price (MSP) this year of Rs 8,120 a quintal for medium-staple cotton and Rs 8,667 for long-staple cotton. The Cotton Corporation of India (CCI) is also preparing to buy. Even so, the open market is paying more than the support price, so farmers prefer to sell cotton to private traders. As a result, farmers appear increasingly inclined towards open-market deals over government procurement.