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Govt gears up for cotton procurement
Oct '15
In the wake of falling export demand from China for the second straight year, the Indian Government has geared up for large scale purchase of cotton to save farmers from distress selling, according to media reports.

Union Urban Development Minister Venkaiah Naidu has asked the Cotton Corporation of India (CCI) to open 58 large-scale procurement centres in Telangana and start purchasing cotton by October 23. Naidu said this after a review meeting on Monday with officials of CCI, which is expected to open 300 procurement centres in the country this season and 84 in Telangana alone.

According to industry sources, India spent almost Rs 160 billion ($2.5 billion) to buy 8.7 million bales of cotton at minimum support price (MSP) in the marketing year that ended on September 30 compared to just 400,000 bales in the previous year.

They expect the prices in the open market to fall below the MSP in view of the negligible demand from China.

Government buying, aimed at supporting farmers, will prevent the dumping of cotton in overseas markets by the world's biggest producer at a time when global prices are near six-year lows.

China, in the recent years, picked up more than half of India's cotton exports, propping up prices despite record output. But it began cutting import quotas last yearto stimulate demand for domestic cotton after discontinuing a stockpiling programme.

China's imports from India fell 42 per cent in the first nine months of the year to 1.16 million tonnes.

Indian farmers have begun the cotton harvest, but prices are already running below the MSP in some southern spot markets, forcing CCI to buying Cotton at an MSP of Rs 4,100 per 100 kg.

"So far we have opened 50 procurement centres. We could open 300 centres across the country like last year," said BK Mishra chairman and managing director of CCI.

"We haven't fixed any procurement target for the current year, but we will buy as much as farmers want to sell," he added.

At the meeting, Naidu directed that payments to farmers should be made transparently online and the CCI should buy cotton only from the farmers who had the necessary identity cards. He said that the Government was determined to solve cotton farmers' problems, and the CCI should take necessary steps to ensure that the farmers were not cheated by brokers.

According to the Cotton Association of India the export demand was subdued and carry forward stocks were at record high at an estimated 7.9 million bales.

CCI officials said this year's procurement was still likely to be lower than last year since production was set to drop by 1.5 per cent to 37.7 million bales while consumption by local textile units has been rising. (SH)

Fibre2Fashion News Desk – India

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