Fall in cotton output, exports feared

The Cotton Advisory Board (CAB) has reportedly predicted a five per cent decline in output in the current season of October 2012-September 2013 as compared to the previous season. The CAB concern was expressed at its very first meeting this season when it estimated cotton production at 334 lakh bales against 353 lakh bales last year. Likewise, cotton exports are likely to drop to 70 lakh bales from last year’s 120 lakh bales. While the reason cited for the fall in cotton output is delay and deficient south-west monsoon in major cotton-growing areas, that for a possible decline in exports is the fact that the current prices quoted for Indian cotton are indeed much higher than the international prices. 

The ruling cotton prices in the country are also far above the minimum support prices (MSP) fixed by the Government. Any attempt to reduce MSP might lead to a switch-over to other crops by farmers. Even otherwise, official crop estimates for the past few years have revealed that cotton growing has become less remunerative, as reflected in the gradual decline in cotton acreage all over the country. There is also an urgent need for regular systematic collection of accurate data on cotton production, crop yield, domestic consumption, stocks with the stake-holders and the surplus available for export. This would go a long way in ending the uncertainties gripping the cotton economy and the textile industry in general. 

Poor export prospects notwithstanding, Indian cotton prices will be hopefully maintained at the current healthy level, given the growing domestic consumption by mills estimated at 250 lakh bales against 239 lakh bales last year. Perhaps mills may be tempted to go in for greater imports, projected at a level of 12 lakh bales against 15 lakh bales last year, because of the far lower international prices of cotton.