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High prices stem cotton exports

21
Nov '08

Sky rocketing price of cotton is one of the key reasons behind slow down in exports this year. Indian cotton prices are much higher compared to international prices.

Available statistics show that this year, cotton exporters have bagged contracts worth 0.25 million bales but could export only 50,000 to 60,000 bales to Bangladesh. Total export last year stood at around 1.5 to 1.6 million bales.

“US cotton is of better quality than our's and cotton of Pakistan is having lesser cost. Further Indian Government is providing 13 percent export tax benefits for fabrics, however for cotton it is mere 1 percent and thus we are left behind in the competition,” says Mr Nitinbhai, exporter and owner of Dhruvanshi Group to Fibre2fashion.

Further Nitinbhai went on saying, “Last year Dhruvanshi Group have exported around 2000 ton of cotton to China only. But this year due to global financial crisis and tough condition, we anticipate approximately 30 percent lesser export in cotton.”

Even Pakistani and US cotton is much lower in prices compared to India. China is the largest consumer of Indian cotton. However, landed price of American cotton in China is 58 cent per pound of lint, while the Indian cotton cost works out to be 62 cent per pound. This gap of 4-5 percent comes to near about Rs1,200 to Rs1,300 heigher per pound.

In this regard, Mr Rakesh Soni, owner Balaji Cotton Linter, says, “Our prices are too high compared to world markets and enquiries for Shankar 6 cotton from China and Iran have slowed down.

While discussing reasons for such difference in prices Mr Rakesh Soni stated, “Pakistan's Afzal with 28 + staples length when reaches to CIF Kandala Port can be purchased at Rs21000 per candy. Around 0.125 million of AFZAL bales have all-ready arrived in Gujarat's market from Pakistan.”

According to Mr Soni, price of Kapas must not be fixed; they always set their self according to supply and demands. Hiking the MSP is no solution for helping farmers; there are many other ways. This price rise has not helped farmers in Gujarat as more than 60 percent cotton ginners have their own farming land.

Fibre2fashion News Desk - India

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