India’s Cotton Sector Divided Over Prospects Of Higher Acreage

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The cotton sector is split over its view on the prospects for the fibre crop next crop year (July 2021-June 2022) with a section saying that the area under the crop might increase, while the other expressing pessimism over the prospects of a higher acreage. This is despite growers getting higher than minimum support price (MSP) for most part of the current season and states such as Telangana declaring their intention to bring more acreage under the fibre crop.

“The area under cotton will increase next season since the kapas (raw cotton) rate is ruling at Rs 6,500-6,600 a quintal. That is almost 15% higher than the MSP,” said Cotton Association of India President Atul Ganatra. For this season, the Centre has fixed the MSP for medium staple cotton at Rs 5,515 a quintal. “Chances of a higher acreage in cotton are bright as it is the most attractive cash crop,” said K Selvaraju, Secretary-General, Southern India Mills Association.

Alternative crops
The United States Department of Agriculture (USDA), in its annual outlook, said that the area under cotton could remain stagnant or drop 2% from about 13 million hectares (mh) this season. During the current season, area under cotton dropped to 12.96 mh from 13.37 mh last season, according to the Committee on Cotton Production and Consumption (CCPC). “Farmers are expected to shift to alternative crops such as soyabean and paddy due to better prices,” it said.

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According to CAI President Atul Ganatra, as per information the trade has received, sowing of cotton would increase in Gujarat and Rajasthan, besides Telangana. Overall, the area could increase by 8-10%. The USDA said that the area in North India, comprising Punjab, Haryana and Ganganagar tracts of Rajasthan would increase by 2% in view of prevailing market prices. In Maharashtra, the area would drop 2% as farmers could shift to pulses in view of kapas prices ruling around MSP levels only, while in Madhya Pradesh demand for edible oils could see growers switching over to soyabean.

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Higher yield
However, the US agency said that production could be higher next season at 380 lakh bales (of 170 kg each) as the yield could increase by 5% to 496 kg/ha in view of the projection of a normal monsoon. The projection of a higher production next season is against estimates of 370 lakh bales output this season. According to the CCPC, output this season is expected to be 371 lakh bales compared with 365 lakh bales.

The CAI has projected production to be unchanged this season at 360 lakh bales this season from the last one. “If we are getting a big cotton crop next season, it is good for Indian farmers, ginning factories and spinning mills. A big crop is a win-win situation for the entire textile chain,” Ganatra said.

Record carryover stocks
Besides higher production, the cotton industry has also carried over record stocks from last season. According to CCPC, a record 120.95 lakh bales of cotton had been carried over to this season, while for the next season, the carryover stock could be 97.95 lakh bales. The USDA does not visualise any problem with regard to demand for Indian cotton, both abroad and in the domestic market.

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“The global recovery in consumption will fuel strong exports of cotton fibre and yarn. In addition, domestic consumption is likely to rise as Covid-19 measures are relaxed and consumers increase their in-person shopping,” the USDA said. For the current season, India has exported 55 lakh bales of cotton compared with 50 lakh bales last season.

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