Cotton Advisory Board may lower output estimate

Last Updated: Wed, Aug 22, 2012 19:40 hrs

The Cotton Advisory Board (CAB) may lower the production estimate of cotton for the October-September (2011-12) season to 34-34.5 million bales from the earlier estimate of 35.2 million bales.

This is due to the commodity’s lower arrivals in the market, mainly affected by erratic rains, especially in Gujarat, the leading cotton producing state in the country. CAB will meet this week to review the output estimates.

Industry sources, however, said the meeting is too early for predicting the production estimate for the 2012-13 season. The meeting is also likely to take up other policy issues, such as rising prices of cotton, import of raw cotton, additional supply sources of cotton for the local market and issues with the proposed Cotton Trade Bill.

Sources said the estimate for the 2012-13 was expected to be not more than 32-32.5 million bales based on the total area of production which is around 10 per cent less at 11 million hectares this year. While Gujarat is yet to receive sufficient rainfall, cotton growing parts of Vidarbha (Maharashtra) and Karnataka are receiving excess moisture due to delayed rains.

The country till date has exported a total of around 13 million bales of cotton. However, due to rising domestic prices, imports also started towards June-July. Till date, a total of around 1-1.2 million bales have been contracted for imports.

For 2011-12, while the ministry of agriculture estimated total cotton production at 35.2 million bales, the private industry has predicted 34.7 million bales. Sources added that in order to avoid such discrepancies in estimates, the Cotton Trade (Development and Regulation) Bill, 2012, has been proposed, which seeks to have complete control, even overriding the existing state laws, over the entire process of production, processing and manufacturing by imposing monetary penalty and imprisonment for violation of any rule.

The draft regulations require all ginning, pressing and processing factories, as well as traders and manufacturers of yarn to register themselves afresh with the textile commissioner within three months of the enactment of the Act and get permanent bales identification system installed at their premises.

Besides, in order to better manage cotton availability for the local market, the textiles ministry wants to regulate cotton exports. Last year, the jurisdiction of cotton export registration process was shifted from the textile ministry to the commerce ministry following complains by exporter associations, said sources. The textile ministry has written to the ministry of commerce and the Directorate General of Foreign Trade (DGFT) on this issue.

In all likelihood, cotton would be taken off the open general licence (OGL) in the ensuing season commencing from October, sources said . The commerce ministry had put cotton under OGL in 2011 for the cotton season ending September 2012.

Until recently, India was a big exporter of cotton. The country’s annual harvest was pegged at 35.2 million bales, while domestic requirement was just 26 million bales. Currently, there is hardly any stock in the domestic market to feed the domestic industry, which is a peculiar situation, said officials.

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