AHMEDABAD: Even as the bumper groundnut crop has forced the Gujarat government to procure more of it to save itself from farmers' ire, the government has got a breather on the cotton front. With cotton prices staying higher than the minimum support price (MSP), farmers are selling the cotton in the open market, easing the burden on government procurement at MSP.
The prices of kapaas or seed cotton, sold by farmers directly at mandis and to ginners, have firmed up to Rs 1,000 to Rs 1,100 per 20kg, with demand getting a boost in both the domestic and export markets. Against this, the MSP is Rs 954 per 20 kg, including Rs 100 bonus announced by the state government.
The ruling BJP government had to face the fury of farmers, especially in Saurashtra, over the cotton and groundnut MSPs during the assembly elections. However, the government's groundnut woes are far from over, as the state is expected see a bumper crop of 32 lakh tonnes.
"Procuring cotton at MSP is not a major headache at the moment, as farmers are getting higher prices than the MSP. The government through CCI (Cotton Corporation of India) has acquired 3,82,317 quintals (2.24 lakh bales) of cotton," said B M Modi. As far as groundnut is concerned, the procurement figure stands at 7.03 lakh tonnes currently.
An official of the Agriculture Produce Marketing Committee (APMC), Rajkot, added, "With farmers getting higher prices than the MSP, they are not going to government designated centres to sell their cotton. Average prices of seed cotton at various mandis range from Rs 1,000 to Rs 1,100 per 20kg."
Citing reasons for firm cotton prices, Arun Dalal, a city-based cotton trader, said, "Prices of yarn and cloth have risen over the last one and half month. Apart from this, there has been good demand from the export market as well. As result, market prices of cotton (ginned) have increased to Rs 40,500 to Rs 41,500 per candy (equivalent to 356kg) for good quality cotton." "The holding capacity of cotton farmers has also increased over the years. Hence, they are not selling produce in one go. They offload their stock in a phased manner," he added. Gujarat is expected to produce 100 lakh bales (one bale is around 170kg) of cotton this year.
So far, 30 lakh bales have already arrived in the market but arrivals are slower, at 40,000 to 45,000 bales per day against usual inflows of 60,000 to 65,000 every day.
Of late, the market has seen steady demand of cotton from Pakistan, Bangladesh and Indonesia, leading to a rise in cotton prices in the local market. According to traders, so far exports commitments of 20 lakh bales have been made across the country, of which 15-16 lakh bales have been shipped.