Textile mills and traders in north and south India buying cotton from Gujarat forced to import cotton over the increasing adulteration, the usual rate of adulteration of 10-15 percent has climbed to 40 per cent this year. Increase in cotton adulteration is also seen in Maharashtra.
According to Arvind Pan, vice-president of the Saurashtra Ginnersâ€™ Association (SGA), ginners are losing Rs 500-700 per bale of raw cotton. Many ginners are mixing lower quality cotton with higher quality cotton to reduce their losses. Yet their returns are not good.
Cotton farmers are holding on to raw cotton waiting for better prices. This has resulted in a price disparity between raw cotton made available to ginners and finished cotton produced by ginners.
A bale of 170 kg raw cotton contains 32 percent lint, 63 percent seed and another 5 percent goes waste. The cost to ginners is Rs 8,500 per bale and Rs 500 for production. Ginners are being offered Rs 8,000-8,200 per bale for ginned cotton. After adulteration, the loss is being reduced to Rs 200-300 per bale.
The members of the Northern India Textile Mills' Association (NITMA) said that textile mills are forced to import more cotton as good quality cotton, especially from Gujarat, such as Shankar 6, is being mixed with lower quality cotton .
K Selvaraju, secretary-general of the Southern India Mills Association (SIMA), said that at there have been raging quality issues, especially from Gujarat, mills in south India had begun booking import contracts from Africa and this could increase if the adulteration does not stop. A large number of ginners are mixing waste cotton with virgin raw cotton.
The adulteration had increased from 15 percent of total arrivals in south India to almost 50 percent this year.
Raw cotton prices have risen from Rs 800 to Rs 980 per 20 kg during the current season. Generally prices decrease for a few months after the new arrivals. But this year the crop is damaged by pests and raw cotton prices are on the rise.
According to Mumbai-based industry expert, raw cotton prices have gained so far for want of good quality cotton. Moreover, the government has declared a bonus, which increased the expectation of farmers, and they are not selling cotton at lower rates. The Centre has increased the minimum support price (MSP) for raw cotton to Rs 810 per 20 kg.
Last month, the Gujarat government declared a Rs 110 bonus on the MSP, which set the price of cotton at Rs 920 per 20 kg. Farmers are not willing to sell cotton below Rs 950 and have been demanding Rs 1,100 per 20 kg.
According to Bharat Boghara, owner of ginning unit in Jasdan, ginners will be able to earn profits only if cotton prices rise over Rs 35,000 per candy but the ginned cotton prices have not increased due to weak export demand. The current ginned cotton prices rule at Rs34,000 oer candy of 355 kg.
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