Cotton farmers in Gujarat, the country’s largest producer of the fibre, are seeing some recovery in prices this year — thanks to a combination of Pakistan’s crop hitting an 18-year-low and the announcement of a Rs 550 per quintal bonus by the state government over and above the Centre’s minimum support price (MSP).
“I sold 25 quintals of my kapas (raw, un-ginned cotton) last week at Rs 4,625 per quintal. This is more than the average of Rs 4,125 that I got last year, but nowhere near the Rs 6,750 peak of 2011-12,” says Pravin Patel from Goral village of Idar taluka in North Gujarat’s Sabarkantha district.
This 43-year-old farmer has planted cotton in three out of his nine-hectares holding. While his production is 10 quintals below last year’s 60 quintals, it has been compensated by higher realisations. “I won’t sell my balance 25 quintals until prices climb further,” adds Patel.
Farmers in Saurashtra, too, are realising an average price of Rs 4,600 per quintal since December, way above the Rs 4,050 MSP declared by Centre for long-staple Shankar-6 and Shankar-10 varieties grown in Gujarat in the current 2015-16 season. “Farmers are holding back their crop. And that itself is contributing to better prices,” notes Bharat Wala, president of the Saurashtra Ginners Association.
The Saurashtra region accounts for two-thirds of Gujarat’s production, which is expected to dip from 10.8 to 9.65 million bales (each containing 170 kg of lint after ginning) in 2015-16 due to poor monsoon rains. The country’s total production, according to the Cotton Association of India, will be only 35.7 million bales, as against 38.275 million bales in 2014-15.
While lower domestic production has helped prop up prices, the real push, though, has come from Pakistan. The US Department of Agriculture has pegged its output at 7.2 million bales for 2015-16, down 32 per cent from last year’s 10.6 million bales. The culprit has been heavy rains during June-July and increased pest pressure from whitefly and pink bollworms, which also caused damage in Punjab and Gujarat. Pakistan’s imports are projected to more than treble to 2.7 million bales, much of it sourced from Gujarat.
Besides, there has also been the Gujarat government’s decision last month — following the battering received by the ruling BJP in November’s district and taluka panchayat polls, linked to rural distress from falling farm commodity prices — to grant a Rs 550 bonus taking the effective MSP to Rs 4,600 per quintal. But this move, effective from December 18, seems to have had positive ‘sentiment’ impact more than anything else.
The Gujarat government has made the bonus conditional upon farmers selling their crop to the Cotton Corporation of India (CCI). The latter, in turn, has procured a mere 37,500 quintals of kapas (7,500 bales of lint) in Gujarat because of market prices ruling above the Centre’s MSP. Most of these purchases, moreover, were made before the bonus announcement. CCI buying very little — entirely in north Gujarat and not a single bale in Saurashtra — has rendered the bonus meaningless in practical terms.
“Only some quantity of the cotton we have purchased will be eligible for bonus.
Our mandate is to intervene only at the Centre’s MSP level,” admits Swapan Kumar Das, general manager of CCI in Gujarat.
Yet, what seems to have helped is the timing of the bonus announcement, coinciding with Pakistan’s production woes and resort to imports.
CCI estimates only around 3.3 million bales or 45 per cent of Gujarat’s crop to have arrived in the markets so far. “The market started very low, but has been going up since. Whenever there is an upward trend, farmers tend to hold back their cotton. Also, farmers in Gujarat have more holding capacity compared to their counterparts in other states,” points out Das.
This situation does not apply to marginal farmers, though. Mahesh Sadadiya sold his entire 22 quintals of cotton in October and in early November. “I needed money for a social occasion. Therefore, I sold my crop in two batches, fetching an average of Rs 4,317 per quintal,” says the 22-year-old from Hadmatiya Khanda village in Jasdan taluka of Rajkot district, who cultivates cotton in his entire 1.5 hectares land.
While Sadadiya’s realisation was better than the Rs 4,150 he got last year, his production has fallen by four quintals due to deficient rains. Also, the higher price is far below the Rs 7,000 rate he realised four seasons ago.
Meanwhile, there are some farmers selling to CCI even with market prices ruling higher than the Centre’s MSP. Mukesh Patel, who has planted cotton in 3.5 out of his 4 hectares field, sold his first picking of 20 quintals in late-October at Rs 4,100 per quintal, slightly more than the MSP. But only last week, he sold another 60 quintals — this time to CCI at the MSP, despite market prices at Rs 4,500-plus. “The auction process takes time at the APMC (agriculture produce market committee) yard and the tractor-trailer drivers charge more for delays. So, I sold to CCI, for which I have received an SMS intimation of money at the Rs 4,050 rate being credited to my bank account. Now, I am awaiting the bonus,” says this farmer of Sadatpura village in Idar.
However, Indrajitsinh Champavat, secretary of the Idar APMC, claims that the farmers selling to CCI are mainly those whose cotton is of inferior quality, making them reluctant to sell at the prices discovered though open auctions. “CCI is not participating at the APMC auction and is, instead, asking farmers to unload their cotton at ginning factories identified by it. The CCI is, then, providing the details of these farmers, which we are further feeding to Gujarat State Agricultural Marketing Board, the nodal agency for disbursal of bonus,” he states.