Cotton prices are rising and rising fast. The Cotlook A index, which tracks prices of raw cotton varieties in the international market, is at a 15-year high. This has the makings of an opportunity for India’s cotton farmers who are often at the receiving end of poor climate, pests and volatile crop prices. Many of these farmers are located in very poor regions such as Vidarbha in Maharashtra, in Andhra Pradesh and other regions. An earnings boost to them can deliver a much stronger multiplier effect than any number of government stimuli.
If only the government would free cotton exports. Since 2009, there have been export restrictions on cotton. India’s cotton output this kharif season is expected to be 33.5 million bales, while the demand is around 20.5 million bales. Allowing exports from selected regions such as Vidarbha can go a long way in helping poor farmers do better.