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Cottoning on to a price rise

Cottoning on to a price rise
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First Published: Tue, Feb 12 2008. 12 12 AM IST
Updated: Tue, Feb 12 2008. 12 12 AM IST
There could be some good news just around the corner for India’s distressed cotton farmers, and especially those in the suicide districts of Maharashtra and Andhra Pradesh.
Cotton production in the US is expected to drop to a 10-year low, according to the National Cotton Council of America, a trade body. Global demand is likely to be above fresh supply, which means that stocks will be drawn down. So, cotton prices are north-bound.
American cotton farmers have moved into wheat and corn production these past few months. Global wheat prices have been on fire because of a poor crop. US subsidies for corn-based ethanol have made that commodity a lucrative one to cultivate as well. Cotton acreage and production have taken a hit.
In contrast to what’s happening in the US, India’s cotton crop will be higher than last year’s and exports of cotton bales are likely to increase this year. In its new report, the Prime Minister’s Economic Advisory Council cites data from the Cotton Advisory Board to say that domestic cotton production will be at nearly 31 million bales, 9% above last year’s level. Higher domestic production and higher global prices should ideally lead to better incomes for Indian cotton farmers—and hopefully ease their distress.
The National Cotton Council of America says, according to a Reuters report, that the main driver of higher cotton production in India is improved yields, which have nearly doubled between 2002 and 2007. If true, this leads to an interesting question: Why have cotton yields soared at a time when productivity growth in the rest of the ­Indian farm sector has been sluggish? The most likely explanation is wider use of genetically improved cotton seeds, especially Bt cotton, over the past five years.
The Cotton Association of India says in a new study that two-thirds of India’s cotton area is now under Bt cotton. There were huge protests when new seeds were introduced in India in 2002—on environmental and economic grounds. At least the second debate should be settled now. The latest data on cotton output and productivity suggest that genetic engineering has helped Indian farmers.
Has Bt cotton delivered on its promises? Write to us at views@livemint.com
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First Published: Tue, Feb 12 2008. 12 12 AM IST