India: Ginners adulterating cotton to reduce loss in margin

Market News

India: Ginners adulterating cotton to reduce loss in margin

Textile mills in north and south India are crying foul over increased adulteration in cotton procured from Gujarat. 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. Ginners are mixing lower quality cotton with higher quality cotton to reduce their losses.

Mills and traders buying cotton from Gujarat said the usual rate of adulteration of 10-15% had climbed to 40% this year. Increased adulteration is also being reported in Maharashtra. “Ginners are losing Rs 500-700 per bale of raw cotton. Many ginners are mixing lower quality cotton to reduce their loss. Yet their returns are not good,” said Arvind Pan, vice-president of the Saurashtra Ginners’ Association (SGA).

A bale of 170 kg raw cotton contains 32% lint, 63% seed and another 5% 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.

“Textile mills are forced to import more cotton. Good quality cotton, especially from Gujarat, such as Shankar 6, is being mixed with lower quality cotton,” said members of the Northern India Textile Mills' Association (NITMA). Confirming that mills in south India had begun booking imports from Africa, K Selvaraju, secretary-general of the Southern India Mills Association (SIMA), said, “There have been rampant quality issues, especially from Gujarat. A large number of ginners are mixing waste cotton with virgin raw cotton. Mills have begun booking import contracts and this could increase if the adulteration does not stop.” Selvaraju added adulteration had increased from 15% of total arrivals in south India to almost 50% 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.