Cotton paradox: Less output, but lowest price in two yrs

This year, due to the terrible outbreak of pink bollworm, the cotton crop has suffered a lot in the major cotton producing areas of North India, especially Rajasthan, Punjab and Haryana. Production has also been affected. Despite this, the price of cotton has reached its lowest level in two years.

These days, the price of cotton is below the Minimum Support Price (MSP) in most of the agricultural produce markets of North India. Regarding this, Shiromani Akali Dal President Sukhbir Singh Badal has requested Prime Minister Narendra Modi to intervene and purchase cotton in Punjab at MSP.

At present the price of cotton in Punjab is prevailing at Rs 4700-6600 per quintal, whereas in Rajasthan the average price is Rs 6200 per quintal. In the mandis of Maharashtra, the largest cotton producing state, the price is running above the MSP. In the seasons of 2022 and 2021, farmers had got the price of cotton up to Rs 12,000-13,000 per quintal. The central government has fixed the MSP of long fiber cotton at Rs 7020 per quintal and of medium fiber cotton at Rs 6620 per quintal for the current season.

Cotton industry experts say that despite decline in production, the biggest reason behind prices not increasing in the domestic market is quality. Due to pink bollworm, not only the production has decreased, but the quality of cotton fiber has also been significantly affected. 

Industry sources say that such poor quality as this year has not been seen in the last 25-30 years. Because of this, orders are not being received from abroad. Countries like China, Bangladesh, to which we used to export more cotton, are not placing orders considering the quality.

Cotton prices are determined by international prices. According to experts, this time the crop in major cotton producing countries like America, Brazil, Turkey and Greece is good and their quality is also better. Importers who earlier used to import from India are now turning to other countries. Due to quality, there is less demand from domestic buyers (textile industry). Domestic buyers are waiting for cotton from Maharashtra and South India. There has been no harvesting yet and there is no outbreak of pink bollworm this year.

Bhagirath Chaudhary, founder of Jodhpur-based South Asia Biotechnology, who works for the interests of Rajasthan's cotton farmers, says, “There is a crisis situation this year regarding cotton production. On one hand, production is expected to reach its lowest level in 20 years, on the other hand, farmers are not even getting reasonable prices. For the last two-three months, cotton prices have been running below the MSP, whereas generally its price remains above the MSP. This time, if the production reaches even 290 lakh bales, it will be a big thing.”

Cotton industry organization Cotton Association of India (CAI) has estimated production of 295 lakh bales in 2023-24, which is about 7.5 percent less than last year's production. About 319 lakh bales of cotton were produced in the country in 2022-23. CAI has estimated production of 43 lakh bales (170 kg in one bale) this year in North India. The northern region includes Rajasthan, Haryana and Punjab.

Production in the Central region is estimated at 179.60 lakh bales, which is less than 194.62 lakh bales last season. The central region consists of Gujarat, Maharashtra and Madhya Pradesh. Meanwhile, CAI has estimated the production in South India to decline from 74.85 lakh bales to 67.50 lakh bales.

According to Bhagirath Choudhary, in view of the low price of cotton in the market, CCI (Cotton Corporation of India) should intervene and purchase cotton at MSP on a large scale across the country. This year, not only pink bollworm has affected, but the weather has also caused a lot of damage. Also, the cost of cotton cultivation was also higher this year. In the absence of proper price, farmers have been hit all round. He says that due to Russia-Ukraine war and Israel-Hamas conflict, international sentiment has been affected and demand for the textile industry has decreased.

Prices have been affected due to supply disruption and reduced demand. To improve this, the central government should intervene and find a solution through bilateral negotiations at the country level. Apart from traditional countries, India also needs to explore other export markets.

Shiromani Akali Dal President Sukhbir Singh Badal has also requested Prime Minister Narendra Modi to intervene regarding cotton. Speaking to the media, he said that he has received complaints from farmers that the Cotton Corporation of India (CCI) has reduced the MSP in Punjab and cotton is being purchased in very small quantities. CCI is cutting MSP by Rs 150 in the name of quality. Also, CCI is purchasing the crop in small quantities. Due to this, farmers are forced to sell their crops to private traders.

Private traders are buying the crop at the price of Rs 5000-5200 per quintal. He said that out of about 3.5 lakh quintals of cotton purchased in the state, CCI has purchased only one lakh quintals. He urged the Prime Minister to give necessary instructions to CCI to ensure the procurement of cotton and said that MSP should be given to the farmers. Those who sold their crops to CCI below the MSP should be paid their dues.