After Modi, ASSOCHAM and Pawar demand Cotton export, but is central govt listening?

Following 40 per cent decline in cotton prices during the past one-and-a-half month, industry body ASSOCHAM today called for lifting the ban on raw cotton exports to protect interests of farmers across the country.

Cotton prices have tumbled from Rs 59,000 to Rs 65,000 per candy on March 31 to Rs 38,000 earlier this month.

“As a result, traders, millers, ginners and at the end farmers have suffered a severe setback,” ASSOCHAM said in communication to the ministries of textiles and commerce.

With opening stock of the year at 45 lakh bales, the production was estimated by the Cotton Advisory Board at 320 lakh bales. But the domestic consumption was estimated at 240 lakh bales. The exports allotted till February-end were 65 lakh bales, it said.

On February 25, the Centre banned exports of raw cotton and cotton yarn and the surplus available is 60 lakh bales with global prices ruling at Rs 80,000 per candy.

“The government must allow cotton exports immediately or those holding stocks will have to bear heavy losses. Traders will not be able to pay fair prices to farmers and this could lead to social unrest,” said ASSOCHAM’s Secretary General D S Rawat.

He said the chamber has received wide representations from trade bodies in Karnataka, Andhra Pradesh, Maharashtra and Gujarat on these lines.

In another development Agriculture Minister Sharad Pawar today said the government should take an early decision on raising the export cap on cotton from the existing 5.5 million bales to protect farmers and handloom sectors.

Pawar, who has written three letters to Prime Minister Manmohan Singh for allowing more cotton exports, cautioned that the government should not delay a decision on cotton exports like it did in the case of sugar.

“Domestic cotton prices are going down. In such a situation, we have to see whether we can export. International market is good and I think we have to take a view at the earliest,” Pawar told reporters on the sidelines of an ICAR-CII Industry meet here.

“We have delayed in allowing export of sugar. Now, international prices of sugar have come down from USD 750 per tonne to USD 620 per tonne now. I don’t want a similar situation for cotton. We have to protect the interest of handloom-makers as well as farmers,” Pawar pointed out.

The minister said that next date of the meeting of inter-ministerial group on cotton will be decided today.

The government had allowed the export of 5.5 million bales (170 kg each) of cotton in the 2010-11 marketing season (October-September) and the entire quantity has already been shipped.

Last month, Pawar had urged the Prime Minister to increase the export quota of cotton by 1.5 million bales to 7 million bales to help farmers realise better prices.

Pawar had noted that there is a case for more cotton exports as domestic production is high and there is a global shortage of the natural fibre.

According to the third advance estimates of the Agriculture Ministry , the country is estimated to have harvested 33.9 million bales of cotton in the 2010-11 crop year, as against 24.22 million bales in the previous year.

However, the Textiles Ministry has lowered cotton production estimates for the 2010-11 season to 30.5 million bales, as unseasonal rains in December, 2010, have affected crop output, leading to lower arrival in mandis.

In the domestic markets, cotton prices have declined to below Rs 50,000 per candy (356 kg each) at present from the high of Rs 62,500 per candy (356 kg each) two months ago.

Meanwhile Gujarat Chief Minister Narendra Modi has said that delay in lifting export quota ban would give benefit to cotton traders only. “I demand immediate withdrawal of export ban. Banning export has already caused too much harm to the farmers. If central government continues to delay the decision on allowing Cotton export, ultimately it would give benefit to traders, because they have already procured cotton from the farmers at lower rate and if export is allowed they would earn higher rate.”