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Cotton traders sweat over ban on Pakistan

After Bangladesh, Pakistan is one of the leading importers of Indian cotton, and the call for boycott of trade with the Islamic nation as resulted in a drop in cotton prices.

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Shivdas Patil, a cotton farmer from Jalgaon postponed the sale of his cotton crop in the hope of a good return price. He calculated that the prices of produce will go up on the eve of elections. Then the Pulwama terror attack impacted trade between the nations.

After Bangladesh, Pakistan is one of the leading importers of Indian cotton, and the call for boycott of trade with the Islamic nation as resulted in a drop in cotton prices. On Tuesday, cotton was sold at Rs 5,300 per quintal within Maharashtra, as against last week's Rs 5,800 per quintal.

Traders say that India has signed an export contract for five lakh cotton bales with Pakistan for this year. However, Vijay Javandiya, an agriculture expert and farmer leader, says that Pakistan ends up buying around 25 lakh bales each year. One bale equals to 170 kg of seedless cotton.

"Prices are dropping every day. We are in a Catch 22 situation as we don't know whether to sell at a lower rate or wait in hope. We are already running losses," informed Patil.

"India produces 3.5 crore bales of cotton every year, out of which 65 lakh bales are exported," explains cotton exporter Pradeep Jain. "In the last four to five years, China too has slowed down its purchase. If there are no takers for the cotton meant for Pakistan, then unsold quantum will impact domestic prices."

"Currently, cotton rates are down and even the market in America is witnessing a decline," said Javandiya. "This will also impact us, as the value of the rupee is also down. Earlier, the cotton rates were maintained because Pakistan was a major buyer."

Prevailing public sentiment aside, traders are employing a wait-and-watch policy. Some desperate voices are already whispering against the ban, and charting an export route via Dubai. "We are checking sea routes," said one trader. "The billing will happen in Dubai but the cotton will finally end up in Pakistan. This will add both time and cost to the transaction, but we may have no choice."

Nanasaheb Patil, a farmer leader, said that it is easy to give a clarion call for war, but there are consequences to consider. "The common people and farmers are the ones at the receiving end of any crisis," he said.

Cottoning On

  • Pakistan is the second largest importer of Indian cotton
  • This year, the two nations, signed a contract for 5 lakh bales of cotton 
  • Prices fell to Rs 5,300 per quintal this week from Rs 5,800 per quintal
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