M. Soundariya Preetha
COIMBATORE: The South India Cotton Association (SICA) has held talks with some banks on funding for cotton purchase.
According to K.N. Viswanathan, Secretary of the association, a couple of banks are already having a programme to finance cotton purchase by trade and industry. Now one more bank has come forward.
Mr. Viswanathan explained that cotton crop production was increasing in the country every year and this year it was expected to touch about 270 lakh bales.
The arrivals now were 75,000 bales a day and this would go up to even two lakh bales a day in January. The daily arrivals would be high for three months from January.
The average consumption by the mills was about 67,000 bales a day. Further, the mills usually kept two to three months stock.
With the arrivals going up and in case the mills had to increase the inventory, "then enough financial liquidity is needed to absorb the surplus crop".
Payment to farmers should not be delayed even in the case of a surplus crop.
The association was suggesting a bank-assisted programme for this for the last two years.
And, during the last one year two banks had come up with such a facility.
The country had six crore cotton farmers and once the programme picked up on a large scale, it would benefit all of them. This would be an agriculture finance package and would vary on a client-to-client and bank-to-bank basis.
However, it would have certain basic parameters. The association was discussing this with the banks.
"More banks are showing interest in the commodity funding through their agricultural development finance," he said.