COIMBATORE : The textile industry has been demanding an immediate ban on cotton exports while the Union Government is of the view that production is sufficient to meet the dem of the mills.
With the price of domestic cotton rising a high level of export contracts, the Confederation of Indian Textile Industry (Citi), Souther Indian Mills Association, SISSPA among others have renewed their dem f restricting exports.
According to data provided by South India Cotton Association (SICA), the opening stock of cotton as on 2009-10 is 71.50 lakh bales (One bale equals 170 kg), while the crop size is expected to be 295 lakh bales, imports is estimated at 7 lakh bales total supply stands at 373.50 lakh bales. On the dem side, textile mills are expected to consume 207 lakh bales, small scale units 23 lakh bales, non-mills 20 lakh bales, exports 55 lakh bales. The total off take would be 305 lakh bales a carry over stock of 68.50 lakh should fills the balance. The production figure f 2009-10 at 295 lakh bales represents an increase of five lakh bales over 2008-09 when the crop size was 290 lakh bales mill consumption was 190 lakh bales. SICA is after all an association of cotton traders.
Now look at what the textile industry represented by CITI, SIMA others have to say. India's output is set to fall 290 lakh bales to 260 lakh bales. The industry needs 240 lakh bales this year, as export prospects have increased on economic recovery hopes. Out of this locally available crop of good quality is only 150 lakh bales. Even this is being exported with the results prices are climbing 23,000 per candy to Rs 25,000 per candy above (One candy equals 356 kg). So more imports mean less crop is available f mill consumption thereby eroding their competitiveness.
Here, politics may take precedence over economics.Cotton cultivation is widespread, spanning across 10 different cotton-growing states having diverse agro-climatic conditions. So it goes without saying cotton like Sugarcane is a sensitive mass appeal crop. In many places, farmers are eager to turn to cotton because the government had announced a steep increase of 40% in Minimum Support Price. In recent years, the government had to come to the aid of Cotton Corporation of India which procured the crop at high prices subsequently the market prices tanked. There are other reasons why farmers are turning to cotton, The use of Bt cotton has led to increased yields in most regions that coupled with the possibility of lower production in USA other countries have led to a bullish situation f cotton. International cotton lint prices have risen to 61.72 cents per pound recently with heavy rains affecting US crop quality quantity. In China, a tight supply situation has led prices to rise to 14000 Yuan. Rains are reported insufficient f crop sowing in Australia.
Even if the Textiles Ministry wants the export ban to be implemented the Agriculture Ministry may not be favourable to it as cotton is a politically-important crop grown in 10 maj states while textiles industry is more focussed on a few states like Maharashtra, Gujarat Tamilnadu.
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