State-Owned CCI Force Pvt Traders To Pay Higher Prices To Cotton Farmers?

In Punjab, private traders have begun to offer higher-than-MSP (minimum support price) rates to cotton farmers, thanks to record earlier purchases by the state-owned Cotton Corporation of India (CCI). The mandi price now hovers around Rs 5,900 per quintal, compared to Rs 5,665 paid by CCI, and MSP (premium quality) of Rs 5,725.

Approximately 80 per cent of the new arrivals were mopped by the CCI in the first three months of the season, which implied translated into purchases of 27.5 lakh quintal. Private traders have bought only 5.5 lakh quintal till now. As demand from the spinning mills escalated and global prices shot up, private traders are willing to pay more to procure stocks.

Private traders feel that they can get better prices from the mills, and also indulge in speculation by storing raw cotton, and wait for the prices to surge further in the near future. Hence, there is a sense of desperation to buy whatever cotton is still available with the farmers, who have queued up to sell whatever quantities they are left with.

CCI started the ball rolling when it made higher-than-usual purchases this season, which was considerably higher than the previous one. This reduced the available quantities for private trade, and prices moved upwards due to demand from the mills. A mill owner told journalists that this is also because of the uncertainty in the future.

According to media reports, there is a tussle between private traders, who are jostling to lay their hands on raw cotton. The fortunate farmers, who have extra quantities, have begun to make way for the mandis, and sell their produce in bulk at the higher prices. In fact, no one seems to be willing to sell to CCI now at the MSP price.