Intervene immediately to stabilize the cotton prices – SIMA Chairman requests Prime Minister

Ravi Sam, Chairman, The Southern India Mills’ Association (SIMA) has appealed to the Prime Minister to intervene immediately to stabilize the cotton prices, as the cotton prices have surged to the peak level in the last 11 cotton seasons especially in the international market.

The Chairman said that the Indian cotton price, though currently attractive due to comfortable closing stock position, has also increased from Rs.41,900/- per candy during December 2020 to Rs.57,000/- per candy during the first week of October 2021 (Sankar-6 variety).

He stated that the Indian cotton season 2021-22 started with over 100 lakh bales opening stock, is likely to produce around 355 lakh bales, consume around 330 lakh bales import around 10 lakh bales and thereby leave around 135 lakh bales for export and the carry over stock.  He expressed concerns that the export might exceed 100 lakh bales in the current season due to US sanction on Xinjiang Chinese cotton that accounts 10% of the world cotton production resulting in not only shortage of cotton but also abnormal speculation in the cotton market.

Ravi Sam pointed out that the import duty has not benefited the farmers, as India mostly imports only 2 to 3% of the requirement especially the speciality cotton like ELS cotton, organic cotton, sustainable cotton, etc., to meet the requirements of nominated businesses of global brands.

He pointed out that often the industry had to import cotton to meet the shortage.  He further shared that around 10 to 15% of the cotton produced in the country is inferior in quality and cannot be used for producing export quality or high-quality yarns and therefore, the industry is forced to import cotton

He has said that 10% import duty will add fuel to the anticipated crisis during the current season if appropriate policy interventions are not taken on a war footing under the current scenario. 

The Chairman stated that as the current market price is ruling very high, CCI will not be able to procure any cotton under MSP during the current season.  He has cautioned that the industry is heading towards a severe crisis on the cotton front as the trade is likely to procure a bulk volume of cotton during the season.

He has appealed to the Prime Minister to introduce an innovative Cotton Procurement and Trading Scheme for CCI by providing Government funding to procure 10 to 15% of the cotton that arrive the market during the season and create a strategic stock for price stability, sell the cotton only to the actual users in a staggered manner till the end of the season and maintain some buffer stock for the next season.