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Cotton production expected to rise 16% next season

The ensuing cotton crop in the country may rise 15.92 per cent to 157.65 lakh bales of 170 kg each from 136 lakh bales in the current season, expiring on September 30, 2003, according to the latest estimate given out by the International cotton Advisory Committee (ICAC).

While the possibility of revision of this estimate cannot be ruled out under the ICAC’s system of updating its estimates on a regular basis (every month), the situation of our crop as of now is quite bright. However, the authorities concerned in India have been unable to give even now, their preliminary forecast of the ensuing crop. This indicates the basic weakness of our government machinery. No doubt the Union textile ministry has constituted the Cotton Advisory Board (CAB), one of its functions is to make available on a continuing basis reliable information on the present and the likely demand-supply position of cotton in the country to enable the government to take appropriate policy decisions on the basis of such information. If the CAB is to discharge this function honestly and sincerely, it should be in a position to indicate not only the present demand-supply position of cotton in the country, but also the likely changes in it even in the ensuing season. While the ICAC has been able to forecast the global cotton scenario not only for the current season, but also for the next one or two seasons, our CAB has displayed its inability to do so, though this renders its very existence more or less superfluous. This, according to its critics, is because, the CAB has been accustomed to act in an irresponsible manner, as there seems to be no one to ask for an explanation for its failure to give out its estimates for the next season. On the other hand, international agencies have been able to accomplish its job in a much responsible manner.

The last meeting of the CAB for the current season was held as far back as on June 27, 2003. It did not discuss even the likely acreage under cotton crop in the next season, taking into account the prevailing price situation for the fibre. Perhaps it could take shelter under the excuse that it could not make even a preliminary estimate until the monsoon was over. However, such excuses do not come in the way of international agencies for making global forecasts for the next one or two seasons. The CAB has preferred to go into hibernation after its June 27, 2003 meeting and remains in deep slumber, though the monsoon is almost at its fag end and the next cotton season is round the corner. No one can say when precisely it will shake off its sloth.

Even the cotton trade and textile industry too is responsible for this situation. They are doing little to give a wake up call to the CAB and make it fall in line with the practice of international agencies so far as forecasting of the crop is concerned. Even All India Cotton Trade Associations’ conference which was held towards the end of July 2003 preferred an inexplicable silence on the likely acreage and crop size in the coming season. The textile industry also remains more or less indifferent to the need for timely corp estimates and their revision at regular short intervals as is being done by international agencies.

Meanwhile, an examination of the ICAC estimates show that the crop in the next season may be higher by 21.65 lakh bales as compared to that in the current season. On the other hand, cotton consumption in the country in the coming season, according to ICAC, is expected to rise by just 2.41 lakh bales to about 175.29 lakh bales from 172.80 lakh bales in the current season. In other words, the increase in the crop, according to ICAC forecast, will be of the order of 15.92 per cent but the rise in consumption may be just around 1.39 per cent.

The reasons are not far the seek. The spinning sector is facing tough times in stepping up either exports or domestic consumption of yarn. Several spinning mills are said to be nursing substantial unsold stocks of yarn. Some are, therefore, keeping down their production. The cotton spinning sector witnessed in 2002-03 some negative growth. The situation in 2003-04 is not quite encouraging either.

The coming season will begin with an opening stock of 24 lakh bales of cotton. If the crop remains at 157.65 lakh bales as forecast by ICAC, the aggregate supply can be of the order of 181.65 lakh bales. If the domestic cotton consumption in the next season remains at 173.29 lakh bales, the next season may end with a very thin year-end stock of just 6.36 lakh bales.

One cannot naturally wait till the situation comes to such a pass when the working of the textile industry in jeopardy. That means that substantial imports of cotton will be necessary even in the coming season, despite nearly 16 per cent expected increase in the ensuing corp. Views may vary about the size of the end-season stock that the country should have. Assuming, however, that the end season stock should be at least around 20 lakh bales, there may be a clear need for imports of 13.64 lakh bales or say 15 lakh bales at least in the next season, despite a substantial increase in corp size.

Actually there are at present no quantitative restriction on cotton imports. Any quantity can therefore be freely imported under OGL. However, the world demand supply position of cotton is expected to remain tight in the 2003-04 season. While the global cotton production in 2003-04 is expected to rise to 20.49 million tonnes, consumption is expected to exceed it and reach 21.23 million tonnes with the result that the end season global stock of cotton is expected to shrink further to 8.07 million tonnes from 8.82 million tonnes at the end of the outgoing season. This indicates a possibility of further rise in cotton prices in the new season.

- M D Dewani