CCI steps aside in Punjab as private players buy cotton above MSP

With private players beginning to pay cotton farmers up to ₹6, 240/quintal, which is ₹515 above the minimum support price (MSP), the Cotton Corporation of India (CCI) has stepped aside.

According to information available with the Punjab State Agricultural Marketing Board, of the 35.55 lakh quintal crop sold in various places of the state till February 18, the CCI purchased a record 23.39 lakh quintal on MSP in 2020-21. Private buyers, meanwhile, have bought more than 12 lakh quintal till last week, and almost all of this purchase was at rates higher than the MSP of ₹5,725 per quintal fixed for ‘long staple’ varieties that have a length of 27.5 to 28.5mm.

State cotton coordinator Rajnish Goel said an estimated 15-18 lakh quintal cotton is still being held back by farmers who hope for a further increase in rates.

“After CCI started buying cotton from October 1 last year, farmers brought about 10 lakh quintal kharif crop to various purchase centres of the cotton-growing belt in south Malwa in the first month. For the same period in 2019, the arrival was 5.71 lakh quintals. CCI made an elaborated arrangement to meet a major surge in arrivals this season,” said Goel.

CCI enters the market when rates are below the MSP and the central agency pays cotton growers after meeting the prescribed norms.

CCI assistant general manager and Punjab in-charge Neeraj Kumar said the agency paid about ₹1,525 crore to cotton growers through direct payment in 2020-21. CCI is paying farmers since 2019 where the middleman has no role in cotton purchase.

“Major purchase was halted across the state from January 5 but CCI continued buying cotton from farmers in small quantities in Muktsar till the end of last month. CCI did not buy cotton stock for over a month as rates in mandis soared and benefited farmers in a big way,” said Kumar.

Of nearly 43 lakh quintal cotton production in Punjab in 2019, the CCI had purchased 3.5 lakh bales or 17.5 lakh quintal.

But in the ongoing season, CCI’s purchase share at MSP has surged by 33%.

Industry sources credit CCI for playing a major role in market stabilisation by purchasing the produce at MSP amid a slump in the yarn sector in 2019 in India and aboard due to a pandemic outbreak. No major case of resentment over delayed payment by the central agency was highlighted by farmers of farm rights groups.

Indian Cotton Association Limited president Mahesh Sharda said as there was a major drop in demand for cotton by the industry, CCI made a crucial contribution by purchasing raw cotton at MSP.

“In 2020-21 season, CCI prevented distress sale by buying the most stock of the kharif crop. As the global situation strengthened amid the Covid-19 scare, CCI further contributed by selling cotton to Indian and overseas users. CCI has been able to exhaust about 70% of the cotton stock of the last two years to meet the demand by the industry,” said Sharda.

In 2019, cotton was sown on 5.01 lakh hectares, the highest in a decade.

A progressive farmer like Baldev Singh of Bathinda’s Bajak village said the centre should enhance MSP for cotton and the announcement should come before the month-long sowing season, starting from April 15 to motivate farmers to replace cotton with paddy.

“Last year was excellent for cotton and then average yield was 10-12 quintal/acre. The surge in the cost of diesel will have a direct impact on farm expenditures and the centre should increase MSP accordingly. The Punjab government should also motivate farmers to prefer cotton in the semi-arid districts for water conservation,” he said.