Pvt players buy cotton above MSP in Punjab, trigger CCI’s ‘ouster’ from market

Sameer Singh

Tribune News Service

Bathinda, January 9

Cotton farmers in the state are quite upbeat as private players have started making purchase of cotton way above than the Minimum Support Price (MSP) fixed by the government for cotton procurement this season.

While Cotton Corporation of India (CCI) — the government authorised agency for cotton procurement — made purchase of large quantity of cotton on MSP of Rs 5,665 (for premium quality of cotton MSP is Rs 5,725), private players have started making purchase of cotton for even Rs 5,900 per quintal.

The private players, including cotton traders and cotton factories from different parts of the state, can be seen entering into rivalry, placing bids and quoting prices higher than the other to purchase cotton on higher than minimum support price in different mandis in Malwa districts these days. As a result, farmers from different villages have started bringing cotton in bulk to the mandis for procurement these days.

While CCI had started procurement early this season and made record purchase in the initial few months, it’s the private players who have started calling the shots at mandis across the state by making maximum purchase of cotton now, thereby triggering CCI’s ouster from the market for now.

Industry experts have attributed the purchase of cotton above the MSP to the increased demand for cotton in the market as traders are further fetching good prices from cotton spinning mills that are placing bulk orders. The experts have also cited a record purchase (approximately 80 per cent) of the total arrival of cotton by the government procurement agency as the reason for increase in MSP as private players feared for shortage of cotton in the coming months.  

Talking to The Tribune, Neeraj Kumar, General Manager, CCI Punjab, said, “The private players are buying cotton above than MSP as there is increase both in demand and price of cotton in the international market. Moreover, cotton traders sometimes store raw stocks and wait for the prices to soar further so that they can get heavy margin for selling it at the right time.”

As per records of CCI, the government procurement agency has made a purchase of 27.50 lakh quintal of cotton, while private players have purchased approximately 5.5 lakh quintal of cotton this season in Punjab so far.

Modan Singh, owner of Chahal Spintex Ltd from Kot Shamir, Bathinda, who bought cotton for Rs 5,880 per quintal basis said, “Unlike last season, CCI has purchased a large chunk of the total arrival of cotton this season and there is shortage of cotton with factories. We want meet the increased demand of cotton and anticipating for an uncertain market ahead, we decided to make purchase way above than the MSP.”

Jaswinder Kumar, Shri Ganpati Cotton Mills, Bhucho Mandi, Bathinda, said, “We want to meet the increased demand for cotton in the market so decided to buy cotton on higher rates. We were also waiting for the prices to come down to make purchase.”

While farmers selling cotton above the MSP are quite upbeat, there is a section of farmers who are holding on to their crop in the hope that prices of cotton might increase in the coming weeks and selling their produce then would fetch them even higher rates.

Resham Singh and a group of farmers from Shergarh village in Bathinda said they are quite happy that their produce has fetched them a rate above than the MSP, but government must increase the MSP rates as input cost for the crop has increased manifold now.

Sarup Singh, general secretary of BKU Lakhowal, said, “If private players have started buying cotton above the MSP rates, CCI must compete with it and make purchase on higher rates and government should also increase the MSP on cotton.”