Cotton Spinning Mills Want To Bypass Agents In Cotton Purchase

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Cotton Spinning Mills Want To Bypass Agents In Cotton Purchase

Cotton spinning mills are seeking parity with the Cotton Corporation of India (CCI) in getting relief from commission paid to middlemen in mandis in the northern states of Punjab, Haryana and Rajasthan.

This year, the state-run agency is set to buy cotton directly to ensure that farmers get the minimum support price (MSP) in full, unlike in the past where the crop was sold and remuneration paid through an agent who would get a 2.5% commission on the payment. In most states, the price of cotton bought by the CCI is transferred to the accounts of farmers. But in the north, most crops, including cotton until now, were sold through agents. "The waiver of commission or 'dammi' should be extended to private mills and traders also as a 2.5% waiver will give a substantial cost advantage to the CCI in a highly volatile price market," said Sushil Mittal, president of the Haryana Cotton Ginners Association.

"We have requested the Punjab government to aid in certification of cotton growers and will also reach out to APMC markets for identification of genuine farmers," a senior official of the CCI based in Bhatinda said. "Direct purchase may affect those farmers who are reluctant to perform paper work," said Haridha Kataria, chief executive of Shree Ganesh Traders. Another issue is over a possible delay in payment. Agents pay either in advance or within a day of purchase, but it may take a week or more for the CCI to transfer the money, he said.

Worried that the waiver of commission could be extended to APMC markets, the Commission Agents Association in Haryana is opposing the move and the members are holding meetings over the issue. "Direct procurement should not be allowed as it will distort the old system between farmers and agents," a Sirsa-based agent said. Farmers, especially those who have planted the crop on leased land, are anxious too over payment issues. "We faced a similar issue in the case of mustard purchase on MSP, but the payment was ensured to the owner of the land," a senior official of the Haryana agriculture department said.

The CCI usually makes substantial cotton purchases in Telangana, Maharashtra and Andhra Pradesh. A 28% hike in MSP announced this year is expected to help boost government procurement of cotton in the north as well this year.