Production estimated at 334 lakh bales.

The government on Friday announced revised minimum support price (MSP) for cotton for early commencement of minimum support price operations to stabilise cotton prices which have witnessed a sharp decline and are operating around minimum support price (MSP) levels.

After a review meeting taken by the Union Textiles Minister Anand Sharma, the government revised MSP prices for medium staple cotton from Rs. 2800 per quintal to Rs. 3600 per quintal and for long staple cotton from Rs. 3,300 quintal to Rs. 3, 900 per quintal for cotton season 2012-13, an official statement issued in New Delhi said.

The Cotton Advisory Board has estimated cotton production in the country at 334 lakh bales, consumption at 260 lakh bales and an exportable surplus at 70 lakh bales. Although domestic consumption is showing increasing trends, the sharp decline in global trade and increase in world stocks have imposed a downward stress on cotton prices, which is reflected in Indian cotton markets also. Domestic prices have touched MSP levels in some places of the State of Andhra Pradesh and are close to MSP levels in Maharashtra, Punjab, Rajasthan and Madhya Pradesh.

The statement said the government has formulated a contingency plan for procurement of 90 lakh bales of cotton under MSP operations in cotton season 2012-13 by operationalising 288 procurement centers in nine cotton growing States. The Cotton Corporation of India (CCI) has already raised working capital requirement up to Rs. 15000 crores for MSP operations. The distribution of cotton procurement centres has been firmed up in consultation with State governments.

The criteria for selection of a procurement centre include expected arrivals of 50,000 quintals, existence of a functional market yard, availability of a weighbridge in the market yard, availability of ginning and pressing factories and availability of fire fighting facilities. Three procurement centres have already become operational in Andhra Pradesh.

A special MSP cell has been created at CCI’s corporate office headed by Director Marketing, A. Chokalingam. Mr. Sharma also directed timely settlement of payments to farmers following procurement. Mr. Sharma and the Union Agriculture Minister, Sharad Pawar had met on November 1 to review the status of MSP operations and current trends in prices. It was agreed that price stabilization operations would be taken up in a coordinated and timely manner to alleviate farmer distress both by CCI and NAFED in the coming months. Mr. Sharma has proposed constitution of a Group of Ministers chaired by Finance Minister, P. Chidambaram to oversee the MSP operations and the sales plan.

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