The Southern India Mills’ Association (SIMA) has called for measures to stabilise cotton prices.
In a memorandum to the Prime Minister, association chairman Ravi Sam said cotton prices have surged recently. The New York Futures Index has increased around 25% in the last 15 days. The Indian cotton price, though currently attractive due to comfortable closing stock position, have also increased from ₹41,900 a candy of Shankar - 6 variety in December 2020 to ₹ 57,000 a candy during the first week of October 2021.
The Indian cotton season 2021-2022 that started on October 1 with over 100 lakh bales opening stock, is likely to see production of around 355 lakh bales, consumption of around 330 lakh bales, and import of almost 10 lakh bales. The industry expects availability of around 135 lakh bales for export and carry over stock. Cotton exports from India may exceed 100 lakh bales in the current season due to US sanction on Xinjiang Chinese cotton that accounts for 10% of the world cotton production.
An analysis of cotton price data for 10 years shows that the domestic industry procures just one third of the cotton produced and the rest are mostly purchased by the trade or Cotton Corporation of India (CCI). The cotton prices remain low from November to March.
The CCI offloads bulk volume to the trade, he alleged. The government should look at measures for price stability and the CCI should adopt policies that will enable the industry, especially MSME mills, to buy more directly from it, Mr. Sam said.
The current market price is ruling very high and the CCI may not be able to procure any cotton under MSP operation during the current season, Mr. Sam said.
He appealed to the Prime Minister to introduce an innovative Cotton Procurement and Trading Scheme for CCI by providing government funding to procure 10 to 15% of the cotton that arrive in the market during the season and create a strategic stock for price stability. The CCI should sell cotton only to the actual users in a staggered manner till the end of the season and maintain buffer stock for the next season.
