POOR rains in the cotton-growing regions of India, mainly in the western states of Gujarat and Maharashtra, have resulted in a spurt in the price of cotton and also resumption in imports.

India, the world’s second-largest producer of cotton, has been steadily enhancing exports of the commodity over the past five years. But growing exports have resulted in scarcity in the domestic markets this year, and poor rainfall has led to imports.

Monsoon 2012 has been the worst since 2009, with the country having recorded a shortfall of 15 per cent (from June 1 to August 14) in rainfall. Saurashtra and Kutch in Gujarat, the leading producers of cotton, have reported nearly 30 per cent shortfall in rains and even parts of central Maharashtra — another major cotton-growing region — have seen scanty rainfall.

Hasmukhbhai Raval, chairman, Gujarat State Cooperative Cotton Federation, notes that the state’s cotton production may decline by nearly 30 per cent and the acreage by nearly 25 per cent.

D.K. Nair, secretary-general, Confederation of Indian Textile Industry (CITI), notes that the area under cotton acreage could decline by nearly 10 per cent nationwide because of the poor rains. Gujarat, Maharashtra and Andhra Pradesh are the three top cotton producing states and all three have received scanty rainfall. Below normal rains could also adversely affect yield, he warns.

Last year, the average yield was about 490 kg a hectare, down from a high of 554 kg a hectare in 2007-08.

Figures released by the agriculture ministry reveal that cotton planting occurred in about 10 million hectares of land, down from 12.2 million hectares last year, when the country produced a record of 34.7 million bales (each of 170 kg) of cotton. The government had projected a record production of 35.2 million bales in the current year, though actual production is expected to be a little over 33.5 million bales.

According to the Indian Cotton Federation, poor rains in most cotton-growing areas have resulted in unsatisfactory crop development. “The most affected cotton belts are Saurashtra in Gujarat, south Rajasthan and north Karnataka,” says the federation. Similarly, growth has not been satisfactory in Punjab.

CITI’s Nair says that India might import 1.5 million bales of cotton this year, double last year’s figures and the highest in nearly a decade. Other analysts expect the figure to cross the two million-bales mark.

India’s annual cotton imports have been below a million bales for the past few years, down from a high of 2.5 million bales about 10 years ago.

India’s domestic demand for cotton is around 26 million bales, though mills prefer to import better quality cotton from the US and parts of Africa. The textile industry imports extra-long staple variety of cotton, which is not available in the country.

Though international cotton prices have plunged over the past few months, domestic prices are nearly 10 per cent dearer than global prices. Cotton was trading at $334 a bale in Mumbai, the highest in over six months.

Worsted textile mills have begun importing cotton in preparation for the expected shortfall in domestic production and also because they are cheaper than domestic cotton.

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IRONICALLY, in marketing year 2011-12 (October to September), India’s cotton exports would add up to about 12.5 million bales, up from 7.8 million bales exported in the previous year. The government imposed a ban on exports earlier in the year, after sales topped 8.4 million bales, but following protests from the powerful cotton-growing lobby, it had to revoke the ban.

International cotton prices fell by 23 per cent last year as demand from China – the largest consumer of cotton – declined sharply. Global cotton production is expected to decline to around 24.8 million tonnes from 26.6 million tonnes last year, while global consumption is expected to fall marginally to 23.1 million.

But cotton spinners in India are hopeful that demand for yarn will surge from China and other markets in the Far East this year. Last year, the spinning industry suffered a setback and had to slash production because of uncertain export policies relating to yarn. Demand for Indian cotton yarn has soared in China, where the spinning segment has slowed down considerably.

However, growing competition from countries such as Vietnam and Bangladesh is worrying the Indian textile and clothing industry. With domestic cotton prices now dearer than international ones, the prospects of exporting apparel to international markets will dim further. Nair of CITI bemoans that other input costs — including power — have gone up significantly in India, making Indian cotton products uncompetitive, vis a vis suppliers from Vietnam and Bangladesh.

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ANOTHER factor that could adversely affect cotton production this year is the ban imposed last week on the sale and distribution of genetically modified bacillus thuringiensis (Bt) cotton seeds by the Maharashtra government. The government imposed the ban on sale of these seeds by the Maharashtra Hybrid Seeds Company (Mahyco), which partnered with US major Monsanto, to sell GM seeds.

The government slapped the ban because Mahyco supplied inferior quality seeds. It has also been accused of hoarding seeds, indulging in black marketing and not providing right information to the regulator. Last year, the government had slapped several cases against Mahyco in 18 districts.

“Mahyco provided incorrect information to district officials about its seed supply,” said Dr S. S. Adsool, director, agricultural inputs and quality control, of the state’s agriculture department. “This resulted in a shortage of seeds leading to law and order situation as farmers blocked roads in Yewala in Nashik district and in Beed.”

Politicians and activists have been demanding a ban on these seeds for quite some time. Activists have said that inferior and expensive seeds have aggravated the crisis in the farm sector, especially in the backward region of Vidarbha, where hundreds of farmers have committed suicide in recent years.

Agriculture activists have been opposed to the introduction of Bt cotton seeds, which was approved for commercial cultivation about 10 years ago. Bt cotton acreage rose from 40,000 hectares in 2002 to almost 12 million hectares today.

Though there is a strong movement against Bt cotton, it has its defenders as well. Dr Ved Kambhoj, chairman, review committee of genetic manipulations, points out that because of BT seeds, India became an exporter of cotton from being a major importer.

But 10 years after the introduction of Bt cotton, there is vehement opposition to its usage, with many lobbies demanding a complete ban on Bt technology. Earlier this month, Parliament’s standing committee on agriculture demanded an in-depth probe into the agriculture ministry’s role in approving the commercial release of Bt cotton in 2002.

“It has to be found out how Bt cotton became a priority when the avowed goal for introduction of transgenics in agricultural crops was with a view to ensure and maintain food security,” said the committee report. “Bt cotton is a cash crop which in no way would have contributed to the food security of the country.”

The agriculture ministry did not discharge its mandated responsibility in a professional manner so far as the introduction of transgenic agricultural crops in India is concerned, it said. Misconception about the potential of Bt cotton saw millions of hectares being diverted to cotton cultivation, reducing the area of several other food crops and thus jeopardising India’s food security, the report added.

The parliamentary panel also blamed Bt cotton technology for contributing to the agrarian crisis in Vidarbha. “The cost-benefit analysis was clearly in favour of the industry and not the farmers,” it added.