Sunday, May 15, 2011

Bale Us Out-Maran’s export ceiling hits cotton farmers-outlook reports

-Maran’s export ceiling hits cotton farmers

Break The Loom

  • Crop failures globally have resulted in international cotton prices shooting up to $775 a bale, up from $387 in 2010
  • Textile ministry has put an export ceiling at 55 lakh bales
  • Export clearances are given on a first-come-first-served basis, leading to favouritism
  • The ceiling has denied cotton growers from making profits through exports
  • Farmers in Andhra feel the ceiling brings down domestic prices further, which benefits only TN-based cloth mills


Cotton farmers in Andhra are crying foul, and what’s got their bale, so to speak, is the rigid ceiling on exports this year imposed by Union textile minister Dayanidhi Maran. Cotton growers and exporters argue that the textile lobby in Tamil Nadu, Maran’s home state, is robbing them of hard-earned profits and at a time when there is unprecedented demand in the international market due to climate disasters in China, Pakistan, Australia and the US. India is the second largest producer and exporter of cotton in the world. At a recent GoM meeting headed by Maran and Union agriculture minister Sharad Pawar, a decision was taken to stick to an export ceiling of 55 lakh bales of cotton (one bale = 176 kg). Experts in the cotton industry say given the current scenario, the Centre ought to allow export of at least 10 lakh more bales.

N. Omkar, a cotton trader in Warangal, says, “The global climate scenario is ever changing and the government ought to take dynamic decisions which will help farmers. China, Pakistan and the US are hungry for cotton. Prices in the domestic market are Rs 6,000-6,200 a quintal but many farmers sold out stocks in a hurry fearing a fall in prices. Ultimately, the domestic spinning/textile mill lobby prevailed upon the government because they want the farmers under their thumb. An increase in export quotas will benefit the cotton farmer who rarely make profits.”

Andhra, Gujarat and Maharashtra are the major cotton-producing states in the country. According to Cotton Advisory Board figures, 17.1 lakh hectares in AP are under cotton cultivation with production at around 65.68 lakh bales. Gujarat accounts for 106.82 lakh bales and Maharashtra 77.31 lakh bales. S.K. Panigrahi, GM, Cotton Corporation of India, Guntur, says cotton availability in the international market has become negative this year. As a result, demand has gone through the roof. Current prices fluctuate near $775 a bale (up from $387 early last year). Panigrahi refused to comment on a review of the export quota but explained that it’s given on a first-come, first-served basis through the textile commissioner’s office in Mumbai (there is no state-wise quota).

Meanwhile, an interesting statistic crops up on domestic cotton consumption—Tamil Nadu accounts for 33 per cent as several spinning, ginning and textile mills operate there. “Mr Maran’s decision to stick to an export ceiling of 55 lakh bales is only to benefit the textile lobby there,” says Tummeti Samireddy, chairman of the Jammikunta agriculture market committee in Warangal. “But it’s not too late...if the ministry takes a favourable decision during the budget session, farmers can still benefit.”

G.P. Chowdary of the AP Cotton Association says that agriculture minister Pawar had suggested an increase in cotton exports to 80 lakh bales, but the domestic textile and garment lobby vehemently opposed the move. “An increase in export quotas might hit the domestic industry. Industry and farmers are two eyes of the government. Both have to be taken care of. The textile minister is simply playing it safe,” he feels.

CPI state secretary K. Narayana however disagrees, saying policies should change to suit the needs of farmers. As he asks, “Why are they being so rigid? Is the export quota written in stone?” According to him, the bottomline is that the farmer always gets a raw deal. Is finance minister Pranab Mukherjee listening?

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