Cotton Corporation's fibre procurement jumps eight-fold this year

Government-owned Cotton Corporation of India has recorded an eight-fold increase in the fibre procurement this year, due to a sharp volatility in cotton prices throughout this season. With the exorbitant price increase, the Corporation had operated only through commercial operations last year, with a total procurement of 150,000 bales (of 170 kg each). By contrast, however, it has procured a total of 1.2 million bales of the natural fibre this year under both minimum support price (MSP) and commercial operations. Of the total quantity procured this year, around 400,000 bales of cotton were procured under the MSP operations while the remaining 800,000 bales were for commercial operations. “The MSP operations continued only for a limited period this year. Cotton harvesting season begins with an above-MSP price, which sharply fell during the peak arrival season in November-December. When prices fell to below MSP level, we entered the market and procured around 400,000 bales at the minimum support price. Later cotton price recovered to the above MSP level which prompted us to stop our operations,” said a senior official of Cotton Corporation of India. Cotton prices started recovering since January 2018 to trade above MSP. Given the mandate to run its commercial operation and also to keep cotton price stable, the corporation started offering higher prices as per the market demand.

This move was followed by private players. “We cannot sit quiet if cotton prices go above the MSP level. We have been given the mandate to run our commercial operations at the market driven prices as well, so long as our operations remain viable. Last year, we procured very small quantities as we felt commercial operations may become unviable,” said the official. Meanwhile, private cotton procurers have also started matching the price offer by the Cotton Corporation, due to which the commodity's price has been ruling high since January. Cotton Corporation auctions the natural fibre for textile mills at the market driven prices. But, it normally refrains from entering the market in case it feels cotton price will remain unviable. While the Corporation has already procured over one million bales so far this season, it plans to purchase another 200,000 bales in the rest of the season, which has almost come to an end. Meanwhile, the government had announced cotton MSP at Rs 4,020 a quintal for medium staple and Rs 4,320 a quintal for long staple cotton fibre for the harvesting season 2017-18. The apex industry body the Cotton Association of India (CAI) has estimated cotton crop for the ongoing 2017-18 crop year at 36.2 million bales, a marginal decline of 0.5 million bales from its previous estimate of 36.7 million bales made in February 2018. During the last season, total cotton output is estimated at 33.73 million bales.