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Silk farmers reel as cocoon prices go into freefall

Deepa Kurup

Import duty on raw silk has been cut from 30 to 5 per cent



SAD SAGA:The mood is grim at the Ramanagaram Government Cocoon Market after prices remained depressed for the 10th consecutive day.

RAMANAGARAM: The mood is grim at the Government Cocoon Market in Ramanagaram. The auction of silk cocoons is on; however, no silk reeler is willing to pay more than Rs. 110 for a kg. At this rate, the loss incurred by each farmer is a heartbreaking Rs. 60 a kg.

Double whammy

The loss is greater and the risk more acute for farmers like Krishnappa from Kurubura Doddi, who cultivate mulberry on leased land. He sold 52 kg of cocoon at Rs. 105, barely covering half his investment. “A large portion of my crop failed. The two good crops this year were sold at a huge loss. How long can we go on like this?” If this continues, Krishnappa, like his brother, will have to migrate to the city. Growing paddy or sugarcane may not be an option because of acute water scarcity.

Almost every farmer at the market here has a similar tale to tell. With no government support, every step of silk cultivation — from buying eggs or worms to fertilizers, even water — runs on informal credit. Indebtedness is endemic among farmers, who have seen prices crash from Rs. 380 a kg of cocoon in January to the current Rs. 120.

Perilous fall

Prices fell steadily after the Union Budget, which saw import duty on raw silk slashed from 30 to 5 per cent. Anticipating this, in late March, prices fell from Rs. 350 to Rs. 200. The first suicide by a sericulturist couple was reported in April. Prices then stabilised around Rs. 220 until May 17 when markets recorded a steep dip to Rs. 150. There has been no respite since.

Silk reelers too have had it rough. The price of raw silk plummeted from Rs. 3,200 a kg in December 2010 to between Rs. 1,800 and Rs. 2,100 in April. In May, it slid below Rs. 1,500, says H.Y. Nizamuddin, a reeler from Mandya. Currently the market rate is Rs. 1,200 to Rs. 1,400. Given that 1 kg of raw silk requires at least 9 kg of cocoons, the economics of reeling silk is just not viable any more. Reelers say traders have stopped buying, anticipating dumping of cheap China silk. The State Government is contemplating fixing a support price for cocoons and allocating Rs. 15 crore to the Karnataka Silk Marketing Board (KSMB). However, activists call this tokenism. The Ramanagaram market alone trades 50 tonnes of cocoons daily, points out C. Yeshwanth of the Karnataka Prantha Raitha Sangha. “At a support price of Rs. 100 a kg, this market alone needs over Rs. 60 lakh a day. How will Rs. 15 crore suffice?” There are 62 government-run silk markets in Karnataka.

In early April, the KSMB purchased 60 tonnes of cocoons for Rs. 12 crore from the market, barely scratching the surface. The State has now written to the Centre seeking a rollback on duty.

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