The government on Wednesday has directed the Cotton Corporation of India to increase its purchase from the major producers, including Gujarat and Maharashtra as cotton prices have plunged below the minimum support price fixed by the Centre due to an expected bumper harvest.
Prices have also slumped below the MSP in many places because of weak global markets , which has stopped exports.
The two states â€” Gujarat and Maharashtra â€” account for almost 80 per cent of the total cotton produced in the country. The cotton production in India is expected to be around 34.62 million bales, down from 36.5 million bales last year. However, the estimates seem to be on the conservative side as late rains pushed up harvest. The estimates were released in September.
Textiles Minister Santosh Gangwar and Commerce Minister Nirmala Sitharaman, too, participated in the meeting with the Agriculture Minister Radha Mohan Singh. The CCI has been instructed to step up its procurement operation by opening more centres wherever necessary and collect cotton from the farmersâ€™ doorsteps. The CCIâ€™s aggressive intervention will prevent distress sale by farmers.
According to the CCI, production in India in 2014-15 is expected to be around 40 million bales, while the opening stock for the season is expected to be around 6 million bales making a total supply during the season of around 46 million bales.
However, domestic consumption is estimated at 30 million bales, making a surplus of around 1.7 million bales. A weak export market has made absorption of this surplus difficult.
The CCI has so far purchased around 2,50,000 bales of cotton (1 bale = 170 kg) in the current season, mainly from the southern states. The cotton season runs from October to September.
The central government has fixed a minimum support price (MSP) of Rs 3,750 per quintal for medium staple cotton and Rs 4,050 per quintal for long staple cotton for the 2014-15 season.
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