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M'shtra farmers panic as cotton prices touch lows
Dec '11
A sharp fall in cotton prices has further aggravated the worries of farmers in the west Indian State of Maharashtra.

Induced by the high prices and impressive returns generated by cotton during last fiscal, farmers increasingly engaged in cotton production and produced a record crop this season.

However, increased production coupled with a drop in demand from China this fiscal has caused the global cotton prices to fall sharply, and the same has even impacted the domestic prices leading to a cut in extraordinary profits reaped by cotton farmers' last fiscal.

Stating that their cost of production comes to Rs. 5,700 per quintal, farmers from Maharashtra are seeking that the minimum support price (MSP) be raised to Rs. 6,000 per quintal from Rs. 3,300 and Rs. 2,800 per quintal for long staple and medium staple cotton, respectively.

At all-India level, cotton has attained great heights over the past 10 years. Cotton output which rested at just 10 million bales (1 bale = 170 kg) during 2000-01, is expected to cross the 36 million bales mark this fiscal.

In fact, no other agricultural crop has been able to grow so much so swiftly in India. While it is widely accepted that the great advancement started since the introduction of Bt cotton, it is not completely recognized that productive cotton exports also contributed to the success.

India exported over five million cotton bales costing more than US$ 6 billion during last fiscal.

In spite of all this, Maharashtra cotton farmers are in distress mainly due to meagrely yields.

As compared to Gujarat, where over 50 percent of the area under cotton cultivation is irrigated, in Maharashtra only 5 percent of area is irrigated. As a result, while Gujarat yielded 650 kg of crop per hectare during last fiscal, Maharashtra's yield was just 332 kg per hectare.

As such, the estimated production cost for the 2011-12 season is much high for Maharashtra at Rs. 2,960 per quintal, compared to Gujarat's Rs. 2,216 per quintal and India's weighted average of Rs. 2,528 per quintal. Thus, it is obvious that cotton farmers in Maharashtra are reaping lowest returns on their investments.

Analysts say the medium staple cotton growing farmers of the State are drawing negative returns from MSP over comprehensive cost. The cotton type with MSP of Rs. 2,800 is reaping a 5.4 percent negative return, according to them.

However, long staple cotton with a MSP of Rs. 3,300 per quintal generated 11.5 percent positive returns. Considering the differences in costs of individual farmers, it is very much possible that some of the farmers in the State would be even incurring losses over their total cost of production.

Fibre2fashion News Desk - India

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