Cotton Corporation Foresees Moderate Level Cotton Prices With Improved Yield And Quality In 2017-18 Season

Economy

Cotton Corporation Foresees Moderate Level Cotton Prices With Improved Yield And Quality In 2017-18 Season

It’s been the consistent endeavour of Cotton Corporation of India (CCI) to enable equitable distribution of cotton among different segments of the industry and assist in cotton exports. Since its inception in 1970, Cotton Corporation has come a long way serving the industry. MM Chockalingam, CMD (I/C) of CCI in an exclusive interview with our Special Correspondent Venkatesh Raghavan airs his views on how India will be able to demand its price in the world cotton market once the current problems facing the industry are surmounted. He also predicted that cotton prices will stay stable for the forthcoming cotton season and may be on the higher side as there is a gap between global supply and demand. Excerpts from the interview are reproduced below.

How are the cotton farmers incentivized to cultivate more hectares of Cotton Crop? Do you think the yield per unit area can be increased in 2017-18 season?

Every year, before commencement of the cotton season (Oct. to Sept.), the government of India, fixes the minimum support price (MSP) of cotton with a view to ensure remunerative prices to the Cotton farmers of the country. It is the assurance and guarantee price to the cotton farmers for their produce by the government of India. Besides this, ministry of agriculture is undertaking various R&D activities for betterment of yield of cotton per hectare. CCI has also been undertaken various CSR activities in the interest of the cotton farmers like supply of hand operated kapas plucker machine to bring down the cost of production over manual picking, Contract farming with front line demonstration for betterment of yield/quality of cotton in backward areas etc.

During current cotton season 2016-17 (Oct-Sept), the acreage under cotton cultivation is 105 lakh hectares (i.e. 36% of world area under cotton) and estimated production is 341 lakh bales (26% of world production). In terms of area under cotton and production, India is the largest cotton producer in the world, however, it lag behind in productivity. At present the average yield of cotton in the Country is about 568 kg/hectare which is far below the world average of 776 kg/ha and other cotton producing countries like Australia (1800 kg/ha), China (1600 kg/ha), Brazil (1500 kg/ha) etc.

The main productivity constraints in cotton cultivation are undependable monsoon, unsuitable soil, varietal multiplicity, use of non-certified seeds, improper spacing, non-descript varieties, inability to take-up timely sowing, non-adoption of recommended technologies especially in case of plant protection and fertiliser use, labour shortage, competition from other crops, endemic to pests etc. India can also reach to the productivity level of other cotton producing countries by concentrating on such technical aspects related with cotton sowing. In this endeavour, the plan of revival of Technology Mission on Cotton (TMC)- Phase-II is targeted looking to the present requirement of high yielding good quality of cotton and face uplift of Indian cotton at global level by adapting best practices and development of desi cotton along with new multi gene GM cotton.Thus, in the coming years, our major thrust will be to increase the productivity and thereby production instead of area under cotton.

The meteorological department has predicted a normal monsoon. Do you foresee cotton prices going down in wake of bumper crop both globally and domestically?

The general fluctuations in cotton prices during the season are mainly influenced by off-take of yarn, international price trends, demand from major importing countries viz, China and other Asian countries, Settlement on futures market, unsold stocks at domestic & international level, trade restrictions etc. Besides this, world ending stocks which used to be 22 million metric tons has reduced to the level of 16-17 million metric tons while, consumption is increasing in comparison to production in all the major countries including India. Thus, looking to the demand and supply position world-wide, it is expected that the prices of cotton may not go down drastically rather it may remain at moderate level above Rs. 40,000 per candy.

What is your vision for the growth of the Cotton Industry in India in the next five years?

With the various governmental measures including implementation of the TMC along with its four mini missions, India has become the largest cotton growing country in the world with reasonably good quality of cotton except the issue of contamination. Due to this contamination issue, Indian cotton is sold at discounted rates in comparison to equivalent foreign cotton. Looking to the current challenges, it was felt that TMC should be revived in second phase and be more oriented towards development of cotton economy as a whole so that contamination controlled cotton may be available to the textile industry and farmers may get remunerative prices for their produce. Accordingly, the plan for implementation of TMC- phase-II is underway.

The objectives of TMC - phase-II covers all the aspects i.e. from increasing the farmers income, reducing the cost of cultivation, establishing linkage of best management practices through weekly voice-mail/sms/advisories to the farmers of all the cotton growing states to reducing chemical load in cotton farming by promoting desi/organic and heritage cotton varieties, production of contamination controlled pure cotton and Indian cotton branding. If the proposed scheme is implemented, it may create a milestone in the history of cotton industry development in the country.

When yield and quality will improve, farmers will get more remunerative prices for their produce. This quality cotton will be used by the nearby textile Industry and will be able to reap the benefits of lesser transportation cost and thereby lesser cost of raw material. This will ease the total cost of yarn production and textile items. Thus, in the next five years, with increase in fibre yield and production of contamination controlled cotton, Indian industry may be able to compete globally with the best quality fiber, yarn and textile items. India will emerge as major textile hub starting from raw cotton production till production of finished textile items.

Ease of cotton prices will bring relief to the yarn spinners who purchase cotton. How are you strategizing to achieve this goal?

Besides MSP operation, to fulfill the raw material requirement of the domestic textile industry particularly during lean season, CCI undertakes commercial purchase operations. CCI offers its cotton stock throughout the season through e-auction without any hoarding and speculation so that textile mills including MSME units do not face any scarcity of cotton. Thus, our corporation tries to maintain the price intact for safeguard of the domestic textile industry and to make them available the good quality raw material at market driven price. For making the sales system more transparent and market driven, CCI has commenced the sale of FP cotton bales through e-auction by way of yankee auction where the textile mills have the choice to bid for the required quantity out of the total quantity offered.

Tell us about the measure taken by CCI to promote the textile industry’s growth in the coming years?

The Cotton Corporation of India facilitate the Indian textile industry with sourcing of their raw material which is of good quality, contamination free and available at market driven rates for production of quality yarn to meet international competition. It has always been the endeavour of CCI to make its sales system more market friendly in the interest of industry. In this context, to make its sales system more competitive and market driven, lint cotton bales branch wise/centre wise are sold through portal base e-auction system where the registered textile mills and MSME units have the choice to bid for any quantity as per their requirement.

This e-auction system is beneficial due to several reasons like better price realization due to competitive bidding without any geographical binding for bidding. Secondly, participants receive real-time market information and contracts can be awarded faster and thirdly, cartelisation of brokers is avoided and it provides secure bidding environment etc. CCI is also offering various pre and post sales services for the benefits of domestic textile Industry. CCI has laid down the procedure for handling the post-sale quality complaints of the buyers.

Besides, based on the feedback received from the textile industry from time to time, CCI takes initiatives which are helpful towards the growth of the textile industry. To ensure more reliability on quality of cotton, certification of cotton is started as pilot project in Maharashtra under CCI Akola branch. If this project is found feasible, this system will be replicated to ensure continuous supply of certified quality cotton to the textile industry which would fetch better price realisation.