Indian cotton seen as a hot political debate this election likely to face slow demand

India, one of the world’s major cotton exporters sees cotton as a hot political debate at the centre this election which had never been a politically sensitive crop, unlike other crops with BJP’s prime ministerial candidate Narendra Modi recently hitting out at the UPA II government’s ‘anti-farmer’ policies which are forcing them to commit suicide.

While, addressing a rally at Akola in Maharashtra, Modi said that the Congress government has banned export of cotton, which is resulting in heavy losses for the farmers, forcing them to commit suicide. This remark immediately sparked off a hot political debate in the election season with refutation coming from the Congress.

The fact of the matter is that cotton traders had been expecting or apprehending a ban on import of cotton yarn from India. On the other hand, mills are on the sidelines due to slow demand. According to market sources, while only a handful of mills and exporters struck deals, most of them failed to do so.

The deals which were reported included: 400 bales from Khairpur at Rs 5,700, 2,200 bales from Shahpur Chakar at Rs 6,000 (conditional), 600 bales from Bahawalpur at Rs 6,400, 300 bales from Kachiwali at Rs 6,475 and 400 bales from Jalalpur at Rs 6,600. Ginners, on their part, were confused under the circumstances and they are suffering huge losses due to unsold stock lying with them.

According to market analysts, cotton prices dropped as demand from millers and exporters decreased. Kapas or raw cotton also was in the negative zone due to low demand from the ginning industry. A large section of the traders felt that cotton price might decrease further in coming days.

The government sets the prices to safeguard farmer incomes and provides subsidies on sales to the poor which is advised by the commission for agricultural costs and prices, has reportedly recommended the price of long-staple cotton be increased to Rs 4,050 per 100 kg from Rs 4,000 and the medium variety be raised to Rs 3,750, from Rs 3,700. A final decision to this effect will only be taken by the new government as and when it is formed once the general elections are over next month.

According to ICF reports, the crop in Andhra Pradesh has improved the yield and not suffered any damage as was anticipated, while in Maharashtra, quality and yield have shown remarkable increase. Although Gujarat topped the list with 120 lakh bales, it was down by 5 lakh bales from the earlier estimate, followed by Maharashtra 80 lakh bales against 70 lakh and Andhra Pradesh 73 lakh bales against 65 lakh projected earlier. Projection in Tamil Nadu and Odisha remained at 5 lakh and 3 lakh bales respectively.

Indian cotton crop production in 2013-14 season is estimated at 37.6 million running bales compared with production of 34.5 million bales in 2012-13 season that ended on September 30 last year, in spite of a marginal decrease in crop area.