Cotton Corporation of India intervention
Cotton prices have moved up and the market
sentiment has improved with the Cotton Corporation of India (CCI)
resorting to purchase of the commodity at commercial rates from
different parts of key cotton growing regions in the country.
Cotton prices have moved up and the market sentiment has improved with
the Cotton Corporation of India (CCI) resorting to purchase of the
commodity at commercial rates from different parts of key cotton growing
regions in the country.
According to top officials of CCI, prices have now firmed up to
R41,500 per candy from the prevailing rates of R38,000 and farmers are
now beginning to get better rates from traders.
International rates are currently at R42,000 per candy. CCO has
stepped in to protect the interests of farmers and industry, M M
Chokhalingam, CMD (in-charge) said.
CCI has purchased 10,000 bales so far and for the last couple of days
has been going slow on purchases because rates have improved, he said.
This is the first time after a gap of four years that CCI has stepped in
to make commercial purchases.
Chokalingam said the Corporation will step in aggressively if the
market rates slip down and it shall remain for the entire season. The
Corporation expects to purchase around 15 lakh bales for the season of
2016-17.
In the start of the season, cotton prices were ruling between R5,000
and R5,200 per quintal in various markets while Minimum Support Price
(MSP) was at R4,160 per quintal.
However, prices dropped down later because of which the CCI intervention helped, he said.
Chokhalingam pointed out that CCI now uses the e-purchase and e-sale
modes for sale and purchase of cotton and therefore had called for bids
through e-auction.
Apart from MSP operations, CCI also has to perform commercial
operations at times in the interests of the farmers and to keep the
market stable. If CCI does not have stocks then traders can control
markets and bring out cotton during lean season,” he explained.
“The intent of the CCI is to ensure that this does not happen and
keep prices uniform. Instead, CCI will purchase some 15-20 lakh bales of
kapas and make it available to the industry in times of need,” he said.
CCI has been purchasing kapas or raw cotton from markets wherever the
prices are lower, Chockalingam said, adding that the commercial
purchase of up to 15 lakh bales would be mainly from the west, central
and southern parts of the country as prices in the northern markets are
ruling much higher.
Meanwhile, the Maharashtra State Cooperative Cotton Growers
Federation has urged both the state and the Centre seeking permission to
purchase cotton from farmers at commercial rates.
We are usually the sub-agents for CCI and have been purchasing cotton
at MSP rates but this time the prices are higher and therefore we would
like to purchase at market rates, N P Hirani, chairman of the
federation said.
Chokhalingam said that the Corporation has authorised the federation
to make purchases. It is only private groups that have been told to
register as buyers or sellers, he clarified.
The Centre had declared an MSP of R4,160 per quintal for the current
season for the long staple fibre and R3,860 for the medium staple
length. Besides protecting cotton growers’ interests, CCI caters to the
needs of its customers, such as the National Textiles Corporation and
several co-operative mills. It also meets the demand of private sector
mills, mainly during the lean season, by releasing the fibre from its
stocks.
Over the last three-four years, CCI has stepped into the markets to
protect farmers when prices fell below the minimum support price (MSP)
levels. Although Indian cotton acreage had dropped by close to a tenth
this year to around 110 lakh hectares higher yields, on account of
widespread rains in key producing states, it is expected to help
maintain output.
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