The Hindu : Andhra Pradesh News : Cotton processing units down shutters

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Wednesday, Nov 26, 2008
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Andhra Pradesh

Andhra Pradesh

Cotton processing units down shutters

S. Harpal Singh

Protest against Centre not initiating relief measures

Industrialists demand incentives in export of cotton
Industry wants government to take corrective steps

ADILABAD: The closure of cotton processing units throughout the country on Tuesday and Wednesday as a mark of protest against the Union government not initiating relief measures for it indicates that the industry is facing crisis. Among the factors that have influenced precipitation of the crisis is the higher minimum support price (MSP) for cotton this year.

Industrialists are demanding incentives in export of cotton or some form of subsidy on purchase of produce in local markets.

At present, the cotton purchasers, who also own the processing units by and large, stand to lose about Rs. 250 per quintal given the downtrend in the open market.

After a hike of nearly 50 per cent over last year, the MSP for cotton is Rs. 3,000 for long staple. This is higher than the price being commanded by the produce in open market.

A delegation of members of associations of cotton processing unit owners from across the country met Union Agriculture Minister Sharad Pawar and Union Textile Minister Shankar Singh Waghela about 13 days back to apprise him of the impending crisis. Among the few suggestions put forward by the delegation leaders was the Cotton Corporation of India (CCI) selling the cotton it purchases to private ginning mills at the rate of around Rs. 2,700 per quintal. Mr. Pawar reportedly accepted this.

“This suggestion was given based on the fact that the CCI realises only Rs. 2,600 for every quintal of cotton it purchases and processes into bales. This way the Corporation is losing about Rs. 400. Our proposal will benefit the CCI by about Rs. 100 per quintal and it will also bale out the industry in the process,” said Gade Vinod, president of the Adilabad Agro Industries Association.

The CCI is purchasing 80 per cent of the arrivals at many of its purchase centres including those in Adilabad district. It processes cotton to make bales that are in turn sold to spinning mills that are already facing a bad situation since last year.

Mr. Vinod predicts a gloomy future for the cotton processing industry in future in case the government does not take some corrective measures. “The closure of mills for the entire season also cannot be ruled out considering the kind of losses businessmen will incur if things continue to be the same,” he observes.

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