Call to raise Minimum Support Price for farmers, is gaining momentum in the region as textile exporters lose out because of demand-and-supply constraints.
PANIPAT: FEW months ago, Panipat-based textile exporters were beaming with the lower prices of cotton citing their input cost going down by around 5 percent to 6 percent. However, the scenario has changed as the exporters are receiving complaints for using fibre yarn in their textile products. The exporters are under pressure of lowering their order book and asking the government to intervene into the matter by increasing the minimum support price (MSP) of cotton.
REASON FOR WORRY
Prem Sagar Vij, president of Panipat Exporters Association said, "We switched to fibre yarn as cotton yarn was not available in the market. Fibre yarn has been gaining popularity among textile manufacturers not just in Panipat but also in other textile hubs of India. Demand-supply constraint worked and the cotton prices went down drastically this year from around Rs 4,800 per quintal to around Rs 4,000 per quintal." Due to this, farmers started shifting their focus from cotton to sugarcane causing further non-availability of raw cotton for textile industries.
Vij added, "Textile manufacturers dealing in the domestic markets can afford to continue with fibre yarn, however, for exporters, their USP in global merchandise is cotton yarn-made products like bath mat, carpet, etc." He said that majority of the exporters receive complains that the quality of the product has gone down and cotton farming is going through such a phase where farmers cannot foresee any profit in cotton farming.
He said that the textile export is already feeling pressure due to the Euro zone crisis and their annual sales has gone down by around Rs1,000 crore in the past fiscal. "We had a sigh of relief when cotton prices crashed to around Rs 4,000 per quintal levels on lower demand by the industries because it increased our profit margin which we passed to our overseas clients by lowering our prices. This move paid lots of dividend as we could tap new markets in the Middle East by denting the Pakistani market share." But, the cheer was short lived as the textile manufacturers met the demand-supply constraint by using fibre yarn to meet deadlines.
Asked about the solution to this problem; Lalit Goel, vice president of the Panipat Exporters Association said, "We need to increase cotton production by providing a level playing field for cotton farmers. And, this can be done by increasing cotton Minimum Support Price (MSP)."
On farmers shifting to sugarcane, Goel said, "It is happening because they are not getting proper return to their yield. Once they start getting proper returns, I won't be astonished if some cane farmers decide to embrace cotton." He said that both are commercial crops and are driven by industrial demand. If the government comes forward with reasonable MSP announcement, then the problem can be sorted out with quite ease.