India Cotton Production Increases, but Demand Enhancement Needed
India Cotton Production Increases, but Demand Enhancement Needed

India Cotton Production Increases, but Demand Enhancement Needed

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By Dr. Seshadri Ramkumar 

The Cotton Association of India has revised its estimate of the country’s cotton crop upward by 1.9 million bales (170 Kgs each) to 35.45 million bales for the current season (October 1, 2019-September 30, 2020).

While Indian production is expected to increase, total domestic consumption is projected to decrease by 3 million bales from the earlier estimate and is now pegged at 25 million bales. The total supply will be about 40.25 million bales. Total domestic consumption last year (2018-19) was about 31.15 million bales (170 Kgs). This trend highlights the need to enhance consumption by exploring new and value-added applications for cotton.

A discussion with a Mumbai-based commodity analyst with over 25 years in the commodity field provided firsthand information on the Indian market. COVID-19 has certainly played a major role in the decline in demand, but the COVID-19 scenario offers opportunities for the cotton supply chain to take stock of the situation. It is time to think about unexplored markets and industrial applications such as medical textiles.

Indian cotton prices are trading at a lower level compared to international value. Yet, in spite of this situation, demand is not high. “Creating demand for cotton will help the entire supply chain such as farmers and end-users,” stated the trade analyst.

The complete lockdown in April and May has negatively influenced manufacturing and, hence, lack of demand. Even during the lockdown period, cotton has been arriving to markets and the Cotton Corporation of India (CCI) has been purchasing. After the lockdown was lifted in June, CCI has been procuring aggressively. To boost the demand, CCI has been offering a bulk discount to mills to procure cotton. As the spinning mills are working at about 75% capacity, demand has not yet picked up speed.

Kharif season’s cotton may start arriving in late September/early October. The cotton supply chain eagerly awaits the demand increase, hoping for improved consumer spending in the forthcoming festival period.

Next year’s cotton crop may be higher than this year, as sowing has increased by 3.20%. Until August 14, cotton sowing had been at 125.48 lakh hectares, compared to 121.58 lakh hectares around this time last year. This increase in acreage adds pressure to find new opportunities. End-users are trying their best to push the products to consumers.

“Readymade goods (RMG) demand in Europe, Middle East and United States needs to pick up,” stated a Mumbai-based commodity expert. “Wholesale trades in markets like Surat are selling shirts at 50% value. Shirts normally selling at Rupees 500 are being sold at Rupees 200 in some Indian markets.”

While COVID-19 has impacted manufacturing and consumer spending, it is time to look for nontraditional applications for cotton. The public mood is behind enhanced manufacturing such as sustainable and additive manufacturing. Surely, cotton will fit well in the new manufacturing equation.

New product development and effective communication are valuable in these testing times. Programs like “Cotton & Coffee,” being organized by The Cotton Board in the United States, are the need of the hour to engage with producers, end-users and consumers.


Source: Cotton Grower

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