The 60% fall in cotton prices have greatly affected the framers in the state.
The cotton farmers in Gujarat, who were already suffering due to 60% fall in cotton prices compared to last year, have one more reason to feel heartbroken.
The Union government on Monday banned exports of cotton with immediate effect to increase supply of the natural fibre in the domestic market. ‘Export of cotton has been prohibited till further orders,’ the directorate general of foreign trade (DGFT) said.
Gujarat farmers, who have the largest share in cotton export are unhappy as their margins have been squeezed further.
Till now, 91 lakh bales (1 bale = 170kg) have already been exported and if experts are to be believed, 70% (60 lakh bales) of export has come from Gujarat alone.
The cotton prices are already down by 60% compared to previous year, due to global slowdown. In mid February 2011, the lint price of Shankar 6 was around Rs58,500 per candy (1 candy = 356 kg) which has crashed by around 60% to Rs34,000 per candy.
The Center's announcement of ban on cotton export has further brought the cotton prices down by 6% in single day. The farmers fear that the move may lead to minimum support price (MSP) coming into effect in coming months. The ban by the Centre has been accentuated due to hoardings by the traders, which led to limited availability of the crop before fresh arrivals next year. Till now, almost 94 lakh bales have already shipped out, against an estimated export surplus of 84 lakh bales.
DGFT said that limit of cotton export was breached on February 20 and 91 lakh bales were exported on February 29 as well.
"At this rate, it is expected that exports would reach 100 lakh bales by mid-March 2012. This is clearly reflected by the registration of exports which reached 120 lakh bales.
Significantly, there was a rush for registration after the figure of 84 lakh bales were reached and in some cases L/Cs have been registered where the name of exporting and importing party is same. This is indicative of a tendency of hoarding in bonded warehouses abroad," said DGFT statement.
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