Spurt in yarn demand yields rich dividends for cotton farmers
BATHINDA: With the demand for yarn in the domestic and overseas market growing up in the last few weeks, rates of cotton crop have also surged in Punjab market.
After a gap of nearly three months since cotton started arriving in mandis in September-end last year, growers are now being paid above the minimum support price (MSP) by the private players. According to the data of Punjab State Agricultural Marketing Board, nearly 2 lakh quintal raw cotton has been purchased by non-government buyers for up to Rs 5,945 per quintal in the last couple of weeks.
MSP of Rs 5,725 per quintal was for the ‘long staple’ with the length between 27.5-28.5 mm varieties sown in Punjab. Whereas the natural fibre with a length of around 27 mm is the ‘medium staple’ and the MSP for such produce is fixed at Rs 5,665 per quintal and most of the produce to arrive in the market would fall in this price segment.
A cotton yarn exporter from Mansa, Dev Raj Banth, said cotton prices were getting aligned since the demand was returning to normal after the Covid pandemic. “Over the past three months, the price of a kilogram of cotton yarn has risen from Rs 180 to Rs 225 due to a surge in demand. Capacity utilisation in textile mills is returning back to pre-covid levels. The market trend suggests that rates for raw cotton may strengthen further,” he said.
Punjab Cotton Factories and Ginners Association president Bhagwan Bansal cite multiple factors — US ban on Chinese cotton, a sudden surge in orders for garments, increased exports to including Bangladesh and Vietnam—for resulting in enhanced demand by the textile market.
“Initially, the pandemic had severely hit the global demand, but now the textile industry has placed a huge demand from India and abroad. Cotton Corporation of India (CCI) played a major role in market stabilization by purchasing the produce at MSP amid speculation,” said Bansal.
Till January 15, total 30.63 lakh quintal cotton was purchased in the state and the CCI registered a share of a record of 22.90 lakh quintals. The central agency sells cotton in domestic and international markets.
To date, 7.73 lakh quintal cotton was bought by the private buyers from Punjab districts and 5.76 lakh quintals was bought by private players below the MSP. But the private players are now buying major chunk at a higher price to meet the demand for cotton.
As Punjab expected a bumper production the last kharif season, the CCI had chalked out a plan to procure up to 50 lakh quintal cotton. The move was aimed at benefitting the cotton growers amid the coronavirus outbreak. Of nearly 43 lakh quintal cotton produced in Punjab in 2019, the CCI purchased 3.5 lakh bales or 17.5 lakh quintals. Rest of the cotton was purchased by private buyers below MSP.
State cotton coordinator Rajnish Goel said for the last few weeks, farmers are preferring to sell their produce to the private players for higher rates.
“Farmers are still holding a stock of nearly 20 lakh quintals and they may hit the market hoping higher rates,” said Goel.