The State Government's market intervention scheme to protect the interests of farmers and silk reelers from crashing prices of cocoons and raw silk appears stuck on the drawing board.
The once-thriving industry is in the throes of its biggest crisis in recent years, as prices have crashed, following the Union Government's decision in the budget to slash import duties on raw silk as well as rise in production of cocoons.
The prices of cocoons fell from about Rs. 350 a kg in February to around Rs. 120 in May. Raw silk prices also fell dramatically — from Rs. 2,800 a kg to less than Rs. 1,500 a kg, during the period.
In response, Sericulture Minister B.N. Bache Gowda promised to release Rs. 10 crore to Rs. 15 crore to the Karnataka Silk Marketing Board (KSMB) to enable the agency to purchase silk from reelers.
He also promised a minimum support price for cocoons. However, little has changed for reelers and farmers despite the promises. Enquiries with the State Sericulture Department reveal that no funds have been released. “The last allocation of Rs. 12 crore to KSMB was made in March 2011, which was spent before the end of the last financial year,” a senior official in the Department of Sericulture told The Hindu .
KSMB's Assistant Manager (Purchases) Purushotham Naik said the Government had given a guarantee to a public sector bank for overdraft facilities up to Rs. 5 crore to help the board purchase silk from reelers.
But Mr. Naik said the board was unable to buy large quantities of silk from reelers.
“About 20,000 kg of raw silk is produced in the State every day and the board purchases only around 600 to 700 kg,” he said.
Though the market intervention is aimed at preventing losses to reelers, and by extension to farmers, the board is, ironically, purchasing raw silk only at the prevailing market price. “We buy at the market rate to keep prices stable,” Mr. Naik said.
Habeebullah Khan, a reeler from Ramanagaram, said the board purchased 2 kg of silk from him at Rs 1,405 a kg. “Though I was given the cheque two days ago, I am yet to get the cash,” he said. Another reeler Shabbir Ahmed said the board “often pays less than the market price”.
The Karnataka Silk Industries Corporation (KSIC) also purchases cocoons from farmers. “We buy around 500 kg of cocoons every day in auction for our reeling unit at T. Narsipur,” Narayan Aithal, Manager (Operations), KSIC, said, adding “we buy it from our own funds.”
“The purchase by KSIC is too little to make any difference as the agency procures a small fraction of the 150 tonnes of cocoons sold every day. And it makes purchases at the prevailing market rate,” said Mallesh, a sericulture farmer in Kuntanahalli village, Maddur taluk.
A senior Sericulture official said the department's proposal to release Rs. 10 crore was pending with the Finance Department. With banks refusing to give KSMB loan to raise funds for purchase of raw silk from reelers, the Government had come forward to provide bank guarantee. A meeting of department officials had been scheduled for Monday in this regard.
Though Mr. Bache Gowda promised support price to farmers, the proposal is yet to receive Government approval, the official added.
