In a first-of-its-kind deal by India for any country, Cotton Corporation of India (CCI) is eyeing an important contract that will allow it to directly export around 10 to 15 lakh bales (each bale weighing 170 kg) of cotton to Bangladesh. This would allow the government to directly export cotton to another country.
Bangladesh is an important market for Indian cotton, with the country importing around 25 to 30 lakh bales per year. Private traders corner exports; this would be the first time CCI is trying to enter the export market directly. PK Agarwal, chairperson-cum-managing director (CMD), CCI, said the contracts were in the final stages with governments of both countries actively negotiating the deals.
“If CCI is able to corner around 50 per cent of the exports to Bangladesh, it will be a milestone for the organisation,” he said.
For 2019-20 (October-September) cotton year, CCI ended up procuring 115 lakh bales out of 310 lakh produced in the country. A huge inventory had threatened to overshadow the upcoming cotton season later this year. Agarwal said CCI had been able to offload around 58 lakh bales of the inventory it held.
“Around 20 per cent of the stocks was procured by MNCs (multinational corporation) who might have exported it further,” he said.
With initial estimates pointing to another bumper crop, there are fears of a “bloodbath” at cotton mandis. Pradeep Jain, founder president of Khandesh Press/Gin Owners and Traders Development Association, said the next cotton season would start with a carryover stock of 100 lakh bales.
Estimates by different sources have pegged India’s production to be around 400 lakh bales for the new season. “The increased production notwithstanding, the lockdown-induced slowdown in the sector will make it near impossible the private traders to pay the government-declared MSP (minimum support price) to farmers,” he Jain said.
For this season, the government-declared MSP for medium staple kapas (raw unginned cotton) is Rs 5,515 per quintal, while that of long staple is Rs 5,825. Market sources feel the average traded price of the lint crop can be as low as Rs 4,500 and might rise to around Rs 5,100 in the season.
The role of CCI in such a scenario assumes importance as the government body procures FAQ cotton at MSP. While Agarwal said the corporation was ready with its procurement plans, many in trade and farmer bodies were not as confident. “The CCI’s procurement can well be over 200 lakh bales this year,” said a trade source.
Farm leader Vijay Jawandiya has asked for procurement centres in Maharashtra to begin operations from Dussehra to prevent distress sales by farmers.
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