Cotton is one of the most critical cash crops for the Indian economy as it provides fiber, oil, and animal feed. However, Cotton is a challenging crop for the farmers to grow, as it is highly susceptible to a variety of pests like Bollworms, Thrips, Whiteflies & Jassids. Cotton is grown on only 2.5% of the world’s agricultural land however consumes 16% of all pesticides used worldwide.
Cotton production in India has been slowly increasing from the 50-70s era where the yields were around 130 kg/HA, and the average production was around the 60-lakh bale mark to about 136 lakh bales in 2002-03 with yields of 302 kg/HA. The increase in yields was driven on the back of increased availability of fertilizers and pesticides as well as improvement in the water availability through irrigation technology.
In 2002, India allowed the first GM seed (BT cotton) by approving Monsanto’s first generation GM technology variety, which soon dominated over 90% of India’s cotton acreage. BT cotton not only improved the yields by 25-60% vs the traditional seed varieties but also reduced the expenditure on the pesticides. The Oil percentage in the BT variety was higher than the non-BT variety which also benefited the ginners and Oil mills.
Over the next few years more farmers switched to BT seeds which resulted in a massive increase in the cotton acreage from 76.3 lakh HA in 2002-03 to 128.5 lakh HA in 2014-15 HA and the yields improved from 302 Kg/HA to 511 Kg/HA and reaching a peak of 566 kg/HA in 2013-14. Production too jumped from 179 Lakh bales to 386 lakh bales in the same period, with production reaching as high as 398 lakh bales in 2013-14. This resulted in India toppling China as the largest cotton producer in the world. Thus, introduction of BT seed helped Indian cotton production triple in just 11 years.
Until 2015-16 Bollgard II technology was successful in controlling the pink bollworm infestation. However, 2014 onwards we saw that the pink bollworm started to develop resistance against the seed. In the marketing year 2015-16, Pink Bollworm heavily affected Gujarat, while in the marketing year 2017-18 we saw an epidemic level of the pink bollworm infestation in MP, Maharashtra, Telangana, AP, and Karnataka. The infestation ranged between 8-92% and resulted in yield losses between 10-30%. The Farmers were caught off guard and did not spray adequate pesticides to counter the effect of the bollworm. Since then, various steps have been taken to counter the effect of bollworms however the results are not very encouraging as the yields are constantly dropping from 566 kg/HA in 13-14 to 422 kg/HA in 23-24.
Need for Newer seed varieties: After the introduction of the second generation GM variety in 2006, there has been no improvement in seed technology. The current BT seeds are the same previous generation variety, against which Bollworms have now developed resistance. They are also not suitable to combat weeds which develop around the cotton crop. Weeds can cause more than 30% decrease in cotton productivity.
There are better seed technologies available, which have superior Boll count compared to its predecessors as it offers three strains of proteins that help cotton plants against bollworm and other pests. Current seed generation also offers better weed management control. Thus, new seeds may lower the farmer’s costs of spraying insecticides as well as herbicides.
Improvement in the Cotton production: Adaptation of the new seed technology will improve the yields and thereby the production. Assuming post adoption of the new seed technology we can improve the yield to 566 kg/HA which was the yield of cotton in the year 2013-14, we would produce 402 lakh bales, which is 62 lakh bales higher than the current year, thus we will have a potential gain of US$3.72 Billion which at the moment India is losing each year. In addition, farmer’s income is likely to improve by 31% due to improvement in yields by up to 15% and 7% saving in cost of cultivation.
Rising domestic cotton consumption: With the crop size almost tripling in 11 years there has been a massive rise in domestic cotton consumption, consumption has grown from 154 lakh bales in 2002-03 to 315 lakh bales in 23-24. This has led to value creation. India’s domestic textiles and apparel market has grown from 50 billion USD in 2010-11 to about 99 billion USD in 2021-22 and is expected to grow to 190 billion USD by 2025-26, as per Industry experts.
This has brought about expansion of the spinning capacities as well as fabric and garment production. Since 2007 the cotton yarn exports increased from 1.76 billion USD to 4.92 billion USD in 2020-21, which is a 176% increase. With improvement in the crop production numbers we would see a rise in the yarn exports as well as an increase in the fabric and garment/madeups production.
Contribution of cotton & cotton textiles products to the Indian economy: For FY21, the Indian domestic Textile and Apparel market is estimated to be US$ 99 billion. Whereas India’s Textiles & Apparel exports were US$ 31 billion. Thus, the total contribution of the sector stands at US$ 130 billion, which is about 5% of India’s GDP for FY21.
The contribution of the cotton and cotton textiles products are the largest chunk. In the year FY21, India’s cotton fiber exports were US$ 2.4 Billion, whereas the cotton yarn exports were at US$ 4.9 Billion, cotton fabric exports stood at US$ 3.3 Billion while Apparel and madeups exports were US$ 15.7 Billion. Thus, the contribution of cotton and cotton textile products stood at close to 60 % of the total textile exports. Given the scenario where we can improve the yields and thus produce up to 402 lakh bales, we would have an additional contribution of US$ 9.8 Billion to the economy every year.
Gains Made from 2005 till 2024: If one adds all the incremental value that Indian cotton and its value chain has generated from the enhanced production volumes credited to BT seed from 2005-2024 for the textile sector and Indian economy, the value is very significant at $ 240 Billion. This value generation could have been higher by an additional $133 Billion if the cotton yields would not have come down from the peak of 566 kgs/Ha, which we had achieved in 2013-2014, to the current levels of 422 Kgs/Ha
Potential Gain that awaits the sector: Once the policy accommodation for new seeds belonging to next generation GM varieties gets rolled out, as the process has already been green lighted, it has potential to contribute to the Indian textile economy in a range of US$ 800 B - US$ 1.6T (base case – best case scenarios) over next 15 years.
Trait fee and IPR debate: Considering the outsized impact that the GM technology holds for the Indian cotton farming and textile sector, it is reasonable to say that such significant policy support should not be allowed to get caught in the debates of trait fee and IPR protection.
Risks of not addressing seed issue with urgency: Sustained low yields of cotton will keep pushing the MSP to higher levels and will make Indian cotton most uncompetitive in the global cotton trade. It will have many negatives consequences such as exports of Indian cotton will go down and will create pressure on MSP agencies to procure a larger share of the crop and that may lead to demand on fiscal resources, it will impact the competitiveness and acceptability of Indian cotton textile in world textile trade, jeopardizing our objectives of much higher textile exports and consequently can trigger a spate of NPAs in Indian textile sector. At current MSP, Indian cotton is more expensive by approximately 15-20% as compared to similar type Brazilian cotton, which has emerged as the most competitive and large cotton exporting nation in the last 6-7 years.
Employment Generation: The textile sector provides a huge employment opportunity for both skilled and unskilled labor. As per IBEF, the textile sector is the second largest employer after agriculture in India employing over 45 million people directly and 60 million people indirectly. Given the additional contribution of ~ US$10 billion due to increase in production of cotton, there is a potential to create up to 3.5 million new jobs in the sector.
As there are many advantages of the next generation GM seed varieties vs. its predecessor as discussed earlier and therefore it is imperative the support and spread for this new technology variant be expedited. This would help boost production of cotton, which will enable us to boost our exports and earn valuable foreign exchange, increase our global market share, generate employment and reduce the usage of the hazardous pesticides and weedicides, thus save the environment including land and water which has a long-term detrimental effect on flora and fauna.
(The writer is Managing Director, National Coopaertive Exports Limited, Former Sr. Vice President (Cotton & Edible Oil) Olam Agri India Pvt. Ltd, Gurugram.This article was submitted before he joined NCEL as Managing Director)