The Cotton Corporation of India (CCI) has procured about 40 lakh bales of cotton as part of its MSP procurement operations so far during the season, amounting to 25% of the crop arrivals in the market, top officials of the corporation said.

P Alli Rani, CMD, CCI, said that while the target is to procure nearly 90 lakh bales, CCI may be able to procure around 60 lakh bales given the current market conditions. Prices are currently bearish and may rise to an extent as the season-end nears, she said.

Nearly 40% of the arrivals have come into the market till date.This year, it has so far procured 40 lakh bales of 170 kg each from markets, where the prices were ruling below the minimum support price (MSP). CCI has not conducted any commercial operations this year and has restricted to only MSP operations.

The CCI has been buying in the regions, where private players were not actively buying, Alli Rani said, adding that some private players have been gradually increasing purchases in the last few days due to an improvement in global prices, and this could impact CCI’s purchases.

Responding to a demand put forth by the South Indian Mills Association (SIMA) urging the textile minister to instruct CCI to sell cotton at market prices, All Rani said that the prices at which CCI is selling cotton is very reasonable. My stock is always available and open for sale but the industry should not expect CCI to sell its top quality cotton at a loss.

Mill owners have complained that the price of Rs 46,000 per candy (of 356 kg each) quoted by the CCI is too high.

The Southern India Mills’ Association (SIMA) has urged the Union textile minister Smriti Irani to intervene and direct CCI to avoid holding the cotton and sell the commodity at market price on a regular basis to arrest price escalation. SIMA chief said that mills are not able to source cotton from CCI as the price quoted by CCI is exorbitantly high when compared to the market price quoting `46,000 per candy as the base price as against the market price of Rs 40,000 per candy of 355 kg.

According to Alli Rani, as CCI has bought most of the best quality cotton that has arrived in the market, the present ruling market prices is of second grade cotton which cannot be compared to the cotton sold by CCI.

Alli Rani said that mills have decided not to participate in our tendering process since they do not want to pay the price set by CCI. Small and cooperative mills have been buying from CCI, but the big mills have not been participating in CCI’s tenders and CCI could sell only 200,000 bales of the 10.8 lakh bales it had procured in the previous cotton year.

The minimum support price (MSP) has been increased from 26% to 28% and CCI had to conduct MSP operation during the current season. The government allotted `2,017 crore in the Union Budget 2019-20 to exercise MSP operation.

As the kapas price varies between Rs 4,700 and Rs 5,250 per quintal depending upon the quality, and MSP is fixed at Rs 5,550 per quintal, CCI is covering around 50% of the cotton that arrives the market under MSP operation.

The country’s cotton consumption is pegged around 315 lakh bales. The country’s cotton production in 2019-20 is likely to jump to 355 lakh bales due to an increase in acreage coupled with an extended monsoon.

Published On : 17-01-2020

Source : Financial Express

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