Cotton industry is trying to poach farmers to increase acreage as farmers may opt for edible oils due to record prices
Cotton prices are on a bull run thanks to good demand from spinning mills as yarn rates have also been leapfrogging. The gradual opening of markets in the USA and Europe and increase in retail business has led to good demand for yarn exports from India. A rally in both cooking oil prices, including soybeans and cotton, to a 11-year high has worried cotton traders that acreage for cotton could fall as farmers choose the smaller crop cycles of oilseeds and pulses. However, production cost of soyabean is less as farmers use their own seeds. Besides, pesticide and labour costs are also lesser in soyabean as compared to cotton.
Given the situation, the cotton industry is busy poaching farmers from other competing commodities as sowing advances with the progress of monsoon.
Cotton prices have increased to more than Rs 7000 per quintal as against the minimum support price (MSP) of Rs 5825/quintal for long staple cotton. While prices of soyabean seeds are ruling above Rs 7000/quintal as against MSP of Rs 3880/quintal.
“As per the field level information with us, we expect that the cotton acreage may decline by about 5% over previous year,” said cotton ginner BS Rajpal, director, Manjit Cotton.
Seed companies too are reporting stable demand. “There may be a nominal increase in overall sale of cotton seeds as farmers are inclined towards crops like pulses and soyabeans, which are short duration crops as compared to cotton, and need less input costs,” said MG Shembekar, managing director, Ankur Seeds.
Short duration nature of oilseeds and pulses allows farmers to go for a second crop during rabi season if irrigation is available. Along with input costs, farmers are also facing problem of pink bollworm, for which they must incur costs on pesticides to sustain productivity.
At a recent trade meet, Cotton Association of India requested the value chain participants from across the country to convince farmers about the prospects of getting good returns from cotton. Cotton prices are on a bull run thanks to good demand from spinning mills as yarn rates have also been leapfrogging. The gradual opening of markets in the USA and Europe and increase in retail business has led to good demand for yarn exports from India. While the edible oil prices have been continuously rising for close to a year due to multiple global factors.
“As oilseed prices are attractive for farmers, we are confident that there will be an increase in acreage of oilseeds. We expect that the area of soyabean, groundnut and castor will go up this kharif season. However, it will be tough to quantify the increase in acreage as farmers also have options of other crops like cotton and pulses,” said BV Mehta, executive director, Solvent Extractors Association of India.