The Cotton Corporation of India (CCI) has begun gearing up for procurement of around 100 lakh bales for 2018-19 season which commenced from Monday. This could be possibly be one of the biggest cotton procurement exercises by CCI in recent years. Maximum cotton procurement had last occurred in 2008-09 when about 96 lakh bales were procured, top officials of CCI said. Last season procurement stood at 3.08 lakh bales.

According to P Alli Rani, CMD, CCI, while the corporation is not committing to 100 lakh bales of cotton this season, purchase centres are being prepared in case prices fall below the minimum support price (MSP). If cotton prices drop below MSP, CCI may have to intervene, Rani told FE.

CCI will establish 348 purchase centres across major cotton growing regions of the country. The corporation is also ready to establish another 30 centres in case of more requirement from the market, she added. Rani said that the focus is currently in preparing for MSP purchase. With a higher MSP declared by the government, farmers will prefer to sell to CCI than approach traders because of assured returns, she opined.

The Centre has announced minimum support price of long staple cotton at Rs 5,450 per quintal from Rs 4,320 per quintal, a raise of 26 % from last year. MSP of medium staple cotton has been fixed at Rs 5,150 per quintal from Rs 4,020 per quintal last year, a hike of 28% to last year. Due to early sowing of cotton in Punjab and Haryana, harvesting is also likely to start early in comparison to other states, she stated. At present, prices for the long staple cotton in Haryana are around Rs 5,300 per quintal which is Rs 150 less than the MSP. Rani said that cotton arrivals have commenced in Haryana and Punjab.

Earlier cotton prices were higher than MSP but now prices have come down to the MSP level. Arrivals from southern states will commence from October onwards, she said. Even if the cotton prices are somewhere near MSP, farmers will prefer to sell to CCI rather than traders because they are assured of timely payments, she pointed out. Cotton sowing, however, was delayed in Gujarat and nearby areas because of which harvesting has been delayed by two to four weeks.

As a result, cotton prices were up in September but the situation is gradually changing.In the last few weeks, there has been a sharp decline in cotton prices which means the government may have to intervene to buy cotton this year, she said. CCI will use Rs 250 crore for cotton procurement this year. This fund will be set up through the consortium of banks, Rani said. Cotton production is likely to remain the same as last season, she added, dismissing reports that the gap in monsoon would affect production estimates in Maharashtra and Gujarat. “I have been on a tour to Telangana where the crop is healthy and even in Maharashtra where the impact of pink bollworm is only in a few pockets of Marathwada and Vidarbha,” she said.

Both Gujarat and Maharashtra contribute 55 % of the country’s cotton production. The Centre has estimated cotton production could be 7 % lower than last year. As per the Centre’s estimates cotton production is likely to touch 324.8 lakh bales this season. Cotton Association of India ( CAI) has retained output at 365 lakh bales. According to private traders, cotton production is likely to affected in Gujarat as seven districts of Gujarat have reported deficit in rains. In Punjab and Haryana, due to heavy rains in the last week of September, the standing crop could be affected to some extent, industry people said. A clear picture could emerge in November.