With the markets in Andhra Pradesh and Maharashtra showing signs of declining trend and fears of cotton farmers getting poor prices once again making a comeback, the Cotton Corporation of India (CCI) on Wednesday launched “commercial intervention” in the seven markets across the country to pep up domestic prices.
CCI intervened in markets of Warangal, Bhatinda, Guntur, Rajkot and a few others. The uncertainty in the cotton markets has been aggravated following the decision of the Commerce Ministry to lift the ban on cotton exports with “conditions” and not allowing fresh registration. This has led to weakening of cotton prices in the various markets across the country forcing the CCI to intervene commercially. Interestingly, only a few days back, CCI had stated that it saw no case for market intervention.
CCI has a corpus fund of Rs.4,000 crore for minimum support price (MSP) but it would not be using this money for commercial intervention. It has been provided separate funds for commercial intervention so that the interests of the farmers are protected. “We will intervene for the MSP when the need arises. Right now, the effort is to restore the confidence of the farmers and traders in the markets through commercial intervention by CCI,” a senior official said.
Sensing the urgency of the matter and weak trend of the markets, it is learnt that Commerce and Industry Minister Anand Sharma had asked officials not to wait for the two week period for formulation of new guidelines to end but to immediately get into action and formulate the guidelines in the next three-to-four days.
“Still, nearly 40 lakh bales are expected in the market in March and another 30 lakh bales in April. There is 35 lakh bales registered for exports already faced with uncertain future. The guidelines need to be formulated and announced without any further delay to prevent further crashing of prices,” another senior Commerce Ministry official said.
Interestingly, the stock to use capacity in India stands at around 11 per cent as compared to 49 per cent in China. The South India textile mills were not buying due to liquidity problem and the big mills, which had liquidity at their disposal, had adequate stocks, officials said.
On its part, the Cotton Association of India (CAI) flayed the imposition of conditions on cotton exports and holding up everything till new rules are framed.
“It is time that government opens export of cotton without any pre-conditions. The farmers should not subsidise textile mills. There is around Rs.20,000 crore worth of cotton still unsold with the farmers. Any delay in the opening up of exports would lead to fall in prices. Even a 10 per cent fall in prices will hurt the farmers to the tune of Rs.2,000 crore. Nearly one crore bales are lying unsold with the farmers,” CAI President Dhiren Sheth told this correspondent.
Our Coimbatore correspondent writes:
Price of Shankar-6 variety of cotton was quoted at Rs.32,000 a candy in Gujarat on Wednesday morning. Though this is above the minimum support price, which is about Rs.29,000 a candy, the market was very low with no buying. The situation is similar in almost all the cotton markets across the country. The textile mills in the South are not buying cotton because of power shortage and liquidity problems, say trade sources in Coimbatore.