Doom for growers as cotton exports banned again-TIMES OF INDIA
NAGPUR: It's cheers for textile industry and tears for cotton growers. Central government on Monday banned the exports of cotton including that of stock in pipeline. Government justified the move as a step to increase domestic supply. The textile industry, expectedly, hailed the decision but cotton farmers, especially in Vidarbha, are lamenting. Cotton has been always linked to the region's agrarian crisis and farmer's suicides. However, only those who have held on to their stock until now will be affected. Observers estimate that around 2/3rds of harvest has already reached the market but there are no confirmed figures.
The ban has brought the cotton rates crashing down in the market yards. Cotton rates, which had closed at Rs 3870 a quintal on Friday, staging a recovery of Rs 300, have now plummeted even below the minimum support price (MSP) at Rs 3,000. The MSP stands at Rs 3,300 although there were no takers for the commodity on Monday. There are reports of traders having simply stopped buying even as farmers thronged the markets with their harvest, stocked for months expecting a better price, say sources.
For traders, it is an opportunity to make a killing as they have turned back farmers in hopes of a further crash. Cotton-growers in farm suicide-hit Yavatmal are reported to have approached the district administration registering protests against traders. Farm activists call the ban a move to please the textile lobby and many are hinting this in reciprocation for their support to ruling party in UP elections. They say there is enough surplus in market and an export ban is not justified.
According to N P Hirani of Maharashtra State Cotton Growers Federation, a state government agency, an output of 345 lakh bales is expected this year. The average domestic consumption stands at 260 lakh bales a year, which leaves a surplus close to 100 lakh bales. Domestic consumption is expected to actually come down this year due to the closure of 85 textile mills that might raise the surplus to 125 lakh bales. So far, the country is reported to have exported 85 lakh bales. Hirani is relying on figures compiled by Cotton Advisory Board.
Vice-president of Textile Association of India Anil Gupta says the sector is under deep distress due to low rates of end product and costlier cotton. The industry can earn a comfortable margin only if processed cotton rates come down to around Rs 30,000 a candy (365 kgs) from Rs 34,000 at present.
Rates jump in global market
Even though government move made cotton prices crash in India, it made the commodity jumped up internationally. This is because a ban from India, the second largest exporter after US, squeezes supply internationally. In US futures markets, rates increased by 4% at 92.43 cents per pound. In China, one of the major markets for Indian cotton, May contracts for cotton futures were 21,450 yuan a ton, added Vinod Ahuja, a Delhi-based exporter. In China, cotton rates are pegged in tonnes while it is candy in India and per pound in the US. It means while government move throttles Indian growers, it helps farmers in other country get higher returns.
Kishore Tiwari of Vidarbha Jan Andolan Samiti in Yavatmal says the price rise has only exposed that there was a demand in international markets but the prices were kept deliberately low at home. Had it been weak international demand, Indian exports ban would have had only a marginal impact on global prices. Arun Sheksaria of M/s Brij Mohan Cotton Exports says such abrupt decisions can make China shun Indian