With higher price volatility, government-owned Cotton Corporation of India (CCI) recorded an eight fold increase in fibre procurement this financial year.
In 2016-17, it procured 150,000 bales (of 170 kg each). In 2017-18 (ending this Friday), it procured a total of 1.2 mn bales of the natural fibre, under both minimum support price (MSP) and commercial operations. A third of the total was MSP buying.
“MSP operations were for a limited period. The harvesting season begins with above-MSP price; this sharply fell during the peak arrival season in November/December. When prices fell below the MSP, we entered the market and procured around 400,000 bales. Later, the price recovered and we stopped,” said a senior CCI official.
The price began recovering since January, to trade above the MSP. “We cannot sit quiet if this happens. We have also been given the mandate to run commercial operations at the market-driven price, so long as this is viable. Last year, we procured very little quantity for this reason,” said the official.
Private procurers had started matching the post-January price offers by CCI, resulting in the level staying high. The state body then auctions the natural fibre for textile mills at the market price.
The season is coming to an end and CCI plans to buy another 200,000 bales before that.
The government has announced an MSP at ~4,020 a quintal for medium-staple and ~4,320 a qtl for long-staple fibre in 2017-18. The apex industry body, Cotton Association of India, estimates the output at 36.2 mn bales for the coming year, a marginal 0.5 mn less from its previous estimate of 36.7 mn, last month.
Total output for 2016-17 is estimated at 33.73 mn bales.