By Sreekumar Raghavan
COIMBATORE (Commodity Online): The textile industry has been demanding an immediate ban on cotton exports while the Union Government is of the view that production is sufficient to meet the demand of the mills.

With the price of domestic cotton rising and a high level of export contracts, the Confederation of Indian Textile Industry (Citi), Souther Indian Mills Association, SISSPA among others have renewed their demand for restricting exports.

According to data provided by South India Cotton Association (SICA), the opening stock of cotton as on 2009-10 is 71.50 lakh bales (One bale equals 170 kg), while the crop size is expected to be 295 lakh bales, imports is estimated at 7 lakh bales and total supply stands at 373.50 lakh bales. On the demand side, textile mills are expected to consume 207 lakh bales, small scale units 23 lakh bales, non-mills 20 lakh bales, exports 55 lakh bales. The total off take would be 305 lakh bales and a carry over stock of 68.50 lakh should fills the balance. The production figure for 2009-10 at 295 lakh bales represents an increase of five lakh bales over 2008-09 when the crop size was 290 lakh bales and mill consumption was 190 lakh bales. SICA is after all an association of cotton traders.

Now look at what the textile industry represented by CITI, SIMA and others have to say. India's output is set to fall from 290 lakh bales to 260 lakh bales. The industry needs 240 lakh bales this year, as export prospects have increased on economic recovery hopes. Out of this locally available crop of good quality is only 150 lakh bales. Even this is being exported with the results prices are climbing from 23,000 per candy to Rs 25,000 per candy and above (One candy equals 356 kg). So more imports mean less crop is available for mill consumption thereby eroding their competitiveness.

Here, politics may take precedence over economics.Cotton cultivation is widespread, spanning across 10 different cotton-growing states having diverse agro-climatic conditions. So it goes without saying cotton like Sugarcane is a sensitive and mass appeal crop. In many places, farmers are eager to turn to cotton because the government had announced a steep increase of 40% in Minimum Support Price. In recent years, the government had to come to the aid of Cotton Corporation of India which procured the crop at high prices and subsequently the market prices tanked. There are other reasons why farmers are turning to cotton, The use of Bt cotton has led to increased yields in most regions and that coupled with the possibility of lower production in USA and other countries have led to a bullish situation for cotton. International cotton lint prices have risen to 61.72 cents per pound recently with heavy rains affecting US crop quality and quantity. In China, a tight supply situation has led prices to rise to 14000 Yuan. Rains are reported insufficient for crop sowing in Australia.

Even if the Textiles Ministry wants the export ban to be implemented the Agriculture Ministry may not be favourable to it as cotton is a politically-important crop grown in 10 major states while textiles industry is more focussed on a few states like Maharashtra, Gujarat and Tamilnadu.

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It was the Ministry of agriculture which had pushed hard for the hike in minimum support price (MSP) of cotton back in August 2008 by over 40 per cent, against which industry had protested but in vain.So far, in the current cotton season (2009-10), cotton arrival has reached 3.8 million bales. “Out of which, 2.3 million bales have already been booked for exports,” said Shishir Jaipuria, chairman, Citi.

Meanwhile, SIMA has reported that the seed cotton arrivals are progressing well after the spate of rains and floods, in most of the cotton growing states except Tamil Nadu during the current fortnight.

A confluence of factors will make the Indian crop worth watching closely in the coming years. Some time back, P D Patodia, Chairman of Cotton Association of India had said that India's output will risen to 45 million bales from present 29 bn bales by FY 2012. This will be acheived through productivity increase. At present, India is the world leader constituting 20% of production and has the largest area under cultivation. At 560 kg per hectare

The increase in production was due to sustained developmental efforts taken by Technology Mission on Cotton, Cotton Corporation of India and various cotton and textile bodies.

Textiles industry nodoubt is a major consumer of cotton and it accounts for 20% of the national industrial production. No wonder, government doled out 66,000 crore under Technology Upgradation Fund Scheme (TUFS) which began in 1999 and it still needs Rs 1800 cr to meet existing demand.But UPA government knows well that it was its loan waiver scheme and NREGA that brought them back to power and hence in a situation where the industry and agriculture are pitted against each other, where would their sympathies lie?

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