NAGPUR: Prime Minister Narendra Modi’s visit to Pandharkawda, which is a major hub for cotton trade, coincides with a steep fall in price of the commodity, the main crop of the region. Hoping to get a higher rate, farmers were sitting on a major part of their produce even though the harvest was over in November. The rates have come down to the level of minimum support price (MSP) or even lower in some places.
The cultivators were banking on global trends hoping for a bumper price in the days to come. Cotton growers of
Vidarbha had hopes on the US-China trade war which was expected to have a favourable tide for Indian farmers.
Both US and China had imposed tariff barriers on each other which led to the scope of demand for cotton from India in both the countries. Aware of the developments, the farmers hoped that the rates would ultimately cross over Rs 6,000 a quintal in local markets.
However, the calculations have failed. An overall slump in the economy has hit the demand for cotton too. There are signs of the conflict easing with a series of negotiations taken up recently. In the last 20 days, the rates have slipped below the minimum support price (MSP) level of Rs5450 a quintal or are just at par in some of the pockets.
“A major dip of Rs500 was seen in the last fortnight,” said sources. The MSP was Rs4,500 earlier and it was raised to Rs5,450 recently by the central government last year.
The season began on a bullish note, followed by a dip. Last month the rates had again touched Rs5800-5900 a quintal and farmers were hoping for a further jump beyond Rs6000 level. However, the trend reversed instead.
In Pandharkawda market cotton has touched Rs5450 to Rs5300, said Suresh Bolenwar a farm activist and a cotton grower himself. A little ahead in
Telangana the rates are further down at Rs5115-5120 a quintal.
Sudhir Kothari, a member of agriculture produce marketing committee (APMC) at Hinganghat in Wardha district, said a large number of farmers had been waiting for the rates to improve. “Now as the rates have touched the MSP, government procurement through cotton corporation of India (CCI) has also started,” he said.
Lorena Ruiz, an economist at International Cotton Advisory Committee (ICAC) in New York, said other cotton-growing countries too are expecting to benefit from the US-China trade war. “But there needs to be an overall situation which can create a demand for the commodity,” she said.
The IMF has cut its growth forecast for China to 3.7% from 3.8%. The consumption estimates for China, from where buying was expected, has also been lowered.
Brazil is also hoping to gain from the trade war and has increased its area under cotton. It is expected to sell its carry forward stock to China, apart from the forthcoming harvest, on getting a good rate.
Keshav Kranti, who heads the technical coordination section of ICAC, said that the rates had touched 100 cents a pound in July — a 10-year high. “However, the rates have come down to 80 cents now. At this level, experts see little chance of rates further going down. Rather, the bearish trend can increase the demand eventually,” he said.
Source: The Times Of India, India Friday, 15 February 2019