Fall in US cotton production is blessing in disguise for India

Fall in US cotton production is blessing in disguise for India

New Delhi: A fall in cotton production in the US could be a blessing in disguise for Indian cotton exporters who expect 20% rise in exports and a 10% increase in prices over last year, experts said today.

“Indian cotton exporters are anticipating an increase in cotton exports to China and other Asian nations in the current season on account of the expected fall in global cotton production," they said, adding reduced output in the US gives an edge to India to further intensify cotton exports.

“Indian cotton exports have surged over 27% to 60 lakh bales in 2007 from 47 lakh bales last year. The demand for Indian cotton is rising and we expect exports to grow further in the coming months," Confederation of Indian Textile Industry (CITI) Chairman P D Patodia told PTI.

Cotton production in the United States fell as “farmers in the US shifted from cotton to grain crops to ease the rising prices of grain, due to which the cotton acreage fell in the country," said National Commodity & Derivatives Exchange economist Kavita Chacko.

“This gave India an advantage to overtake the US as the second largest producer of cotton in the world," she added.

The surge in Indian cotton export has also been fuelled by the diminishing price difference for the domestic cotton in the global market.

“Indian cotton is getting better price in the global market. The difference has narrowed down to 1-2 cents from 6-7 cents," Patodia said.

"The quality of India’s cotton was considered to be lower due to which our exporters used to get less price compared to other countries. Now, the situation has changed for better and Indian cotton is accepted worldwide,“ he added.

Besides, cotton yield in India has risen significantly over the last couple of years, which will prompt more exports in the coming months.

Cotton production in India has rose 35 lakh bales to 280 lakh bales in October 2006-September 2007 compared to the previous season, while the production of cotton in the US has declined by 29 lakh bales to 277 lakh bales for the same period.

“Since 2003, cotton yield has reportedly increased by 70% from 302 kg a hectare in 2002-03 to the current 518 kg a hectare largely on account of better crop management practices and reduction of pesticides," said Chacko.

Meanwhile, India’s cotton output for the new crop season has been predicted to be a record 310 lakh bales.

The increased use of Bt cotton has also contributed to the rise in cotton production by reducing input costs and growers losses, she added.

Exporters are also finding support in high polyester prices with the surge in crude oil prices. However, the increase in the value of the rupee by 11% against the US dollar this year is likely to affect profits of the exporters, experts said.