Modi Government's MSP Procurement: CCI Buys Nearly 50 Per Cent Of Punjab's Estimated Cotton Output

Even as a false campaign is on saying the Narendra Modi government will end the minimum support price (MSP) scheme for various crops, it has taken procurement of agricultural crops to a higher level.

While it has procured over 500 lakh tonnes of paddy at MSP, a record, benefitting 64.25 lakh farmers, it has also bought nearly one-fifth of raw cotton that is estimated to be produced in the country this year.

Punjab, a major beneficiary with 40 per cent of paddy produced in the State being procured, is again a beneficiary of the cotton MSP procurement by the Cotton Corporation of India.

According to CCI General Manager (Purchase) Atul Kala, 5.30 lakh bales (170 kg each) of raw cotton has been procured from Punjab at MSP so far this season that began on 1 October.

This means, over 50 per cent of the cotton that Punjab is estimated to produce this season (October 2020-September 2021) has been procured at MSP by CCI.

The Cotton Association of India (CAI), the apex body of Indian cotton trade, has pegged cotton production in Punjab at 10.50 lakh bales out of the 356 lakh bales the country is projected to produce this season.

This is against 360 lakh bales produced last year. Punjab has been a laggard with regard to cotton production, ranking tenth among the 11 producing States.

CAI President Atul Gantara has said that the cotton industry estimates that the CCI will buy about 125 lakh bales this season.

CCI's Kala said that CCI had trebled its cotton procurement this year with 78 lakh bales bought from farmers till yesterday (4 January).

According to a statement from the Ministry of Consumer Affairs, Food and Public Distribution, 76.60 lakh bales of cotton were procured until 2 January, benefitting 14.82 lakh farmers across the country.

The Ministry said the value of cotton procurement, made from Maharashtra, Gujarat, Telangana, Andhra Pradesh, Odisha and Karnataka, was Rs 22,410 crore.

Cotton has been procured at the MSP of Rs 5,515 a quintal for this agriculture season (July 2020-July 2021).

A statement from the CCI said that the corporation had opened 440 centres for MSP procurement in 140 districts of the 11 cotton-growing States in the country.

Stating that cotton procurement is 300 per cent higher than last year, it said that in view of huge turnout by farmers, they had been asked to bring their produce in a phased manner.

The procurement of cotton by CCI, especially from Punjab, is yet another proof of the State enjoying more than a fair share in the Centre's scheme of MSP procurement.

The huge procurement from Punjab alone comes on the heels of farmers in the State leading the protest against the three Bills passed by Parliament in September, ushering in the much-needed agricultural reforms.

The three Bills passed by Parliament, as part of the government’s Atmanirbhar Bharat Abhiyan to help the economy recover from the novel Coronavirus pandemic, are: The Farmers' Produce Trade and Commerce (Promotion and Facilitation) Act, 2020, the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020, and the Essential Commodities (Amendment) Act, 2020.

The Act on Farmers Produce Trade and Commerce allows a farmer to sell his produce to anyone and anywhere in the country with the government saying it promotes the concept of “one country, one market”.

The Agreement on Price Assurance Act enables farmers to enter into contract farming, while the Essential Commodities (Amendment) Act removes the cap on the stocks of commodities such as onion and potato that wholesale and retail traders can hold in their warehouses.

However, farmers, especially in Punjab, Haryana and parts of Uttar Pradesh, have been led to believe by Opposition parties such as Congress, Aam Aadmi Party and the Left that these reforms have been brought in to end the MSP system and favour a few corporate houses.

In particular, these parties have been alleging that the Adani and Reliance groups would benefit but both these corporate firms have firmly denied these allegations.

Farmers have also been put ill-at-ease by scare-mongering of some elements, who have spread rumours that farmers would lose their lands.

The Centre has been at pains, explaining that these reforms were only to benefit them and achieve the government’s objective of doubling farmers' income.

But vested interests have continued to mislead the growers, resulting in the protests on the borders of the national capital region of Delhi continuing for the 41st day today (5 January).

According to Anand Popat, a Rajkot-based trader of raw cotton, yarn and spinning waste, cotton procurement in Gujarat has been lower compared to other States.

“There are two reasons. One, the daily quota fixed for CCI procurement in Gujarat gets exhausted quickly. Two, buyers are reaching out to the growers' farmgate to get their requirement,” he said.

CCI’s Kala said with private players now offering higher than MSP prices for cotton, the corporation might have to slow down its purchases.

“Procurement might drop slightly in view of private players offering better prices,” he said.

“Private players are buying raw cotton at around Rs 5,500 a quintal at farmgate,” Poppat said.

Though a tad lower than MSP, the price offered at the farmgate is good, considering the fact that growers save costs on transporting their produce.

In the agriculture produce marketing committee (APMC) mandis in Rajkot district of Gujarat, the highest producer of cotton in the country, kapas (raw cotton) prices are ruling between Rs 5,200 and Rs 5,700 a quintal.

On MCX, cotton futures for delivery later this month were quoted at Rs 21,120 a bale (170 kg), down Rs 40 from yesterday. This translates to Rs 44,225 per candy (356 kg) as per trading standards.

In New York, cotton ended at 78.97 cents a pound, up 08.5 cents. This translates to approximately Rs 45,675 a candy.

Indian domestic prices are now reflective of the global trend with the country being the destination for countries such as Vietnam, Bangladesh, Turkey and China to source cotton.

Exports are seen helping the industry cut down the huge carryover stocks it is carrying. Last season, India exported 50 lakh bales but despite that, it was left with a 107.50 lakh bales carryover stocks.

This season, with exports seen at around 55-60 lakh bales, the carryover stocks are estimated to be about 93.50 lakh bales.

Supporters of the farm reforms point out that the despite Punjab farmers vehemently opposing the new legislation and demanding their repeal, the Modi government has been treating them more than fairly.

The procurement of paddy and cotton are proof of the northern State continuing to get a privileged treatment, they said.