Mumbai: Cotton farmers in Maharashtra are seeking higher prices for their produce even as global prices are set to drop by as much as 36% next year because of a supply glut caused by an increase in area under cultivation.
Prices may drop to 80 cents a pound in 2012 from this year’s range of $1-1.25 a pound, Terry Townsend, executive director of International Cotton Advisory Committee (ICAC), said in an interview on the sidelines of the World Cotton Research Conference in Mumbai on Monday.
Farmers’ organization and opposition parties in Maharashtra, India’s second-largest cotton producing state, are demanding that the Central government almost double the minimum support price (MSP), or the price set by the government before harvest, to Rs 6,000 per quintal, or about Rs 27 a pound, citing high cost of production.
Crop failures, stagnant prices of cotton, rising cultivation cost and low yield have led to large-scale suicides of cotton farmers from Vidarbha region in the state in the past 10 years.
“I don’t understand the rationale behind declaring the MSP of Rs 3,300 per quintal, when prices in domestic market are between Rs 4,200 and Rs 4,400 per quintal and in international market around Rs 7,500,” said Kishore Tiwari, president of Vidarbha Jana Andolan Samiti. “If you don’t want to see a spate of cotton farmer suicides once again, it is essential to give an MSP of Rs 6,000.”
Cotton production in the state is expected to fall to 20,000 tonnes in Aug-July period (sowing season) from about 30,000 tonnes estimated when the sowing began because of erratic rain, and farmers will not be able to recover cultivation cost, Tiwari said. Still, global production is expected to rise 8% in the same period and reach 26.9 million tonnes (mt). Cotton production in India, the world’s second biggest producer, will increase to 6 mt in the same period from 5.4 mt last year as the area under cultivation has increased to 11 million hectares from 10 million hectares, according to ICAC.
This is likely to result in a surplus of 2.3 mt and global stocks are likely to touch 11.3 mt by the end of the current cotton trading year, according to ICAC.
“As farmers have managed to get higher prices last year, if this year’s prices fall, next year, many farmers will shift to other crops and reduce the area under cotton cultivation, resulting in an increase in cotton price,” said N.P. Hirani, chairman of Maharashtra State Cotton Growers Cooperative Marketing Federation.State Congress president Manikrao Thakare said he has written to chief minister Prithviraj Chavan to take up the issue with Union agriculture minister Sharad Pawar at the earliest.
“We are all for giving maximum price possible to farmers but opposition parties and so-called farmers’ organization should not make irresponsible demands. They should understand ground realities,” said Madan Bafana, a spokesman of the Nationalist Congress Party, an ally of the Congress party in both the state and the Centre.
Last year, Maharashtra produced 7 million bales of cotton, or about a fifth of the nation’s cotton production.
One bale consist of 70 kg of cotton. Cotton is the second-most important commercial crop in the state after sugarcane, and large parts of Vidarbha, Marthawada and northern Maharashtra regions cultivate cotton.
“The government should also clarify its policy on cotton exports; order on cotton exports issued in March earlier this year says, exports will be allowed till October only from last year’s stock,” said Vijay Jawandhia, leader of Shetkari Sanghatana (Farmer’s Organization). “But October has passed now and there is no clarification, whether exports are allowed or not, if government removes this ambiguity, it will help to increase the prices of cotton in domestic market.”