Indian Cotton Export Policy Flip-flop is behind Fresh Cotton Rates Slide
Nagpur: May 12, 2012
It was obvious that Indian cotton production and supply is real pendulum of international prices when cotton future prices shut up to upper circuit in US and china on march 5th this year when Indian Govt. imposed blanket ban on cotton export in order to clear environment so that hopeless traders to forcibly off-load their stock to domestic textile-mills and Garment Industries as Nobody was able understand the move of the commerce ministry to ban cotton export when domestic demand is just 20 million bales as against National production of 35 million bales. There was no reason to put restrictions as it was not proposed either by textile ministry or Agriculture ministry when interest of domestic textile mills are fully protected hence the truth behind cotton export flip-flop and the circumstances that forced to take the ill-motivated decision to enforce a fresh ban on the cotton export in the light of the revelation of the union agriculture minister Sharad Pawar, observations of the fact finding committee of GOM and the protest by the chief ministers of Maharashtra, Gujarat and Andhra Pradesh exposed on going massive corruption in commerce ministry which is till continue even after the huge cry is matter of concern as DGFT even after lifting export ban is not allowing fresh cotton export resulting much needed damage to cotton trade as cotton prices plummeted to record low in the international market on Thursday having its impact at home the next day. It is officially reported today that a bullish trend in the commodity's prices last year had left this sector harried, which in 2011-12 lobbied for the rates to come down. Exports were banned in March to bring down domestic rates. Last week, when the ban was lifted, it was with strict quantitative restrictions. The brief upswing was again reversed as the traders eventually saw the fine print of the notification, opined president of Vidarbha Jan Andolan Samiti (VJAS) Kishore Tiwari.
“The hostile cotton export policy and frequent flip-flop by DGFT has exposed weakest face UPA Govt. where corruption has powered progressive reforms free trade and open economy promoted by Indian Prime Minister .This has been routine practice in Indian Govt. to bypass PMO and floats fresh restrictions even though it is badly effecting million of dying farmers and traders and even opposition is not raising the voice against these misdeeds that much more irritating ”Tiwari added.
As per media reports today after news restriction implications started showing effects in a week after the ban was supposed to have been lifted, prices of lint (processed cotton) came down by over Rs 700-1000 a tonne touching Rs 34,000 a candy. There was another jolt with rates falling by Rs 1000 in a day to rule in the range of Rs 33,000 to Rs 27,000 a candy in domestic market on Friday. This was impact of the record fall in US cotton futures to 81 cents a pound-- a reduction of 1.49 cents.The impact was not as severe on raw cotton prices that only fell by a couple of hundreds touching Rs 3900 to Rs 3800 a quintal on Friday. However, arrivals from farmers have come down to negligible levels with sowing just a month away. With farmers having already suffered losses due to bearish trend, further worsened by ban on exports, this time it was traders' benefit.
Now media officially admitting that the ultimate gainer is textile sector, say sources in business. Had the ban, or quantitative restrictions, not been there the rates in India would not have fallen as much causing huge losses to more than 7 million cotton farmers in India and this hostile flip-flop in cotton export policy likely to effect in a low sowing expected in coming season .there is urgent need to remove stringent conditions that no exporter could get a permit to ship more than 10,000 bales at a time. As expected it started bringing down the rates, which fell by around Rs.800 a candy from May 4 onwards.
“Vidarbha cotton farmers have been demanding that cotton export should restoration with pre ban conditions so that there interest is protected ” Tiwari urged.