Within days of the Textile Ministry’s decision in the first week of March to lift the ban on cotton exports and the Director-General of Foreign Trade issuing a notification to this effect, the Government seemed set to launch a probe into the sudden spurt in exports in the recent past, mostly to China. This virtually meant a reversal of its stand and restricting further export of the commodity. The Government claims that as against the exportable surplus of 84 lakh bales of cotton, 95 lakh bales have already been exported. With booming exports, there is gradual slowdown in the domestic market, with the stock-in-use position estimated at 29 lakh bales against the required 62 lakh bales. Hence the Government justification to scrutinize the export receipt certificates already issued in view of the fear that a handful of traders must have siphoned cotton off to a certain firm in China in anticipation of an escalation in prices to make quick profits on a future date.
The situation has further deteriorated with the reported declining trend in major cotton growing States of Andhra Pradesh and Maharashtra and fears of farmers getting poor prices once again. This has led to ‘commercial intervention’ by the Cotton Corporation of India (CCI) in markets all over the country to pep up domestic prices. The Government decision to check further cotton export and allow only ‘conditional’ export, as also not to allow fresh registrations, have added to market uncertainties. CCI would utilize the special funds provided for commercial intervention to check a further fall in cotton prices and restore the confidence of cotton growers. Meanwhile, market arrivals are already on the rise, and nearly 40 lakh bales of cotton are expected in March and another 30 lakh bales in April.
The wayward and uncertain cotton policy is to blame for the growers not getting a reasonably high price for their produce. What happened this time last year is a typical example of how farmers are helpless even if the Government comes to their rescue by announcing export of an additional 10 lakh bales of cotton, besides the exportable surplus of 55 lakh bales allowed earlier during the season. Though intended to ensure a fair price for farmers, the situation was taken undue advantage of by a group of international traders with huge resources to buy cotton at throwaway prices from farmers and sell them later to make much higher profits in a situation of artificial shortage. As of now, cotton worth Rs. 25,000 crores remains unsold. Even a 10 per cent fall in prices would hurt farmers to the extent of Rs. 2,000 crores. Mills all over the country refrain from buying cotton because of the liquidity problem. Southern mills are reeling under severe power shortage and their operations are almost at a standstill. The solution for the current impasse lies in the opening up of the export market that offers a more remunerative price for cotton growers. The earlier the export curbs are removed, the better.