Procurement of Kapas

As a premier organisation in Public Sector and engaged in marketing of cotton Corporation acts as a role model in the procurement of kapas (seed cotton) through open auction, conducted by the APMCs, in the notified market yards. The CCI officials attend these auctions regularly from day one of the arrivals and remain present through out the season till viable arrivals last in the markets. Regular presence as well as regular purchases by CCI in these markets, help in creating a competitive environment to the advantage of cotton farmers in realizing price in commensurate with quality of their kapas produce. All kapas quantities are purchased in the open auction and in competition with other traders and mills under close supervision of APMC Officials. About 258-300 procurement centres are operated in different cotton growing States, and over the years, CCI has been able to generate a confidence among the cotton growers who invariably insist for the presence of CCI representative in the kapas auctions. All these purchases are made either under Minimum Support Price operations or under commercial operations.

Price Support Operations

For every crop year, Government of India fixes a Minimum Support Prices (MSP) for the basic two varieties viz. J-34 (Rajasthan) and H-4. The MSP for other varieties are then fixed by the Office of the Textile Commissioner, Mumbai, depending upon quality differentials and market differentials of different varieties from the two basic varieties. As and when kapas prices of any variety touch the level of MSP, CCI as a Nodal Agency of Government of India, resorts to immediate market intervention and makes purchases of kapas at MSP without any quantitative limits. The MSPs of different varieties are fixed for FAQ grade kapas stipulating minimum quality parameters on staple length and mic value. Since total kapas arrivals in the market yards, do not match the prescribed parameters of FAQ grade, Corporation allows purchases of below FAQ grade kapas also by offering prices in commensurate with quality and within the MSP of the variety concerned. This helps the cotton farmers in selling their kapas produce under MSP operations and avoid distress sales. Corporation keeps itself ever ready to meet the eventualities of support price operations in all the cotton growing States. Depending upon the intensity of these operations, Corporation creates required infrastructure in the form of regular procurement centres as well as satellite centres so that farmers are not compelled to travel long distances for selling their kapas produce. Processing of kapas through satellite centers, is arranged by CCI at the nearest processing points.

Procurement of kapas through the MSP mechanism has benefited the cotton farmers of the country, in a big way through assured price for their kapas produce as well as timely payments and it has helped in retaining their interest in cotton cultivation. Upto late 1990s and before the onset of globalization process, the occasions for MSP operations in the country were far and few as the domestic cotton prices normally ruled above the international prices. However, with globalization since 1998-99 and thereafter, the occasions for kapas prices touching the MSP levels have increased owing to domestic prices ruling in tandem with international prices.

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