The Aftereffects of the Indian Cotton Export Ban: Part 2

Ginner

Author’s note: With the announcement of cotton export ban on March 5, 2012, India was considered a capricious partner in the global cotton market. “The decision to ban exports took into account the trend of domestic consumption and depletion of domestic availability,” the government said in a statement.

The topic of India’s cotton export ban was among the most-discussed issues in 2012 among the cotton fraternity. Everyone started analyzing the news as “China’s Loss” or “United States’ gain.” Post-ban, the world has only heard about the plight of International traders. But the suffering has been uniform, including within India.

We have made an attempt to highlight the views of all the major segments of Indian textile trade: the cotton farmer (producer), the ginner (processor) and the textile mill (consumer).Each view will be featured in a Cotton International newsletter (Oct. 4, 11, and 18).

Interview with Vikram Patel, Director and Chairman, Siddhi Cotton Ginning and Pressing Pvt. Ltd., Gujarat

  • Partner in 3 other Ginning factories
  • Director, All India Cotton Ginning and Pressing Association
  • Director, All Gujarat Cotton Ginning and Pressing Association

Author: Manish Daga, director, Lesha Impex Pvt. Ltd., AKA The Cotton Guru

Ginning is one of the most significant processes in the textile chain. It defines the quality characteristics of the processed cotton like contamination, neps, fibre uniformity, moisture and sea worthy packaging. But life of an Indian ginner is not easy. He buys seed cotton from farmers vide oral agreements and sells to textile mills and exporters vide written contracts.

Here is an interview from a leading ginner of Gujarat known for his moral conduct.

Q1. What was the impact that the export ban had on your business? Please list both negative and positive impact, if any?

Ans: The cotton market in India fell immediately after the Government implemented the ban. Cotton was earlier sold at INR 108 per kilogram to INR 95 per kilogram. Our company holds three ginning factories in Gujarat. At the time of the  ban, we had a collective stock of 5000 bales, which amounted to 1.7 million USD. The exporters were not ready to take the delivery of cotton which was in our possession at the time of the ban. This cotton turned out to be a liability for us. In addition, there were rejections in the material that was already delivered. Even the cotton mills deducted allowances for cotton delivered at higher rate. Payments were made in small instalments. We stopped ginning for some time to assess the situation. Restarting ginning after a gap also proved detrimental. The farmers were not ready to sell seed cotton at lower rates. Also, the cotton market went on falling. We then forcefully diverted the business to domestic mills. A lot investment was essential as the credit period was longer. The ban has caused a lot of financial loss and mental stress to the ginners.

Q2. How would things have been different for your business if the ban had never been implemented?

Ans: If the government did not implement the ban, we would have been able to sell our cotton smoothly. There was a reasonable parity in cotton ginning and everyone was satisfied. There would have been more profit and higher turnover. The purchase and sale of cotton would have been regular and unaffected. The committed cotton would have been shipped and all the international contracts been honoured thereby preventing the dispute between the traders.

Q3. Regardless of whether it helped your business or hurt it, what do you think the export ban did to India’s reputation as a reliable trading partner in the international community?

Ans: Such ban implementations always hurt the business in any field, not just cotton. It also spoils the reputation of the country as a trading partner. It creates misunderstanding among the traders and an atmosphere of confusion.

 

Q4. Do you foresee the government continuing to implement policies that affect free trade in the near future (for example, another export ban next season, removing or instituting import/export tariffs etc?)

Ans: At present, there is no fear of a ban as the market is facing a bearish trend. However, more cotton imports may cause serious losses to the ginners. Also, the export quota was never in favour of small and medium size ginners.

Q5. Any other comments?

Ans: The government must implement policies in advance or else open up the economy as per the world trade. We have invested a lot of money, which we have earned from our hard work. Hence, we always make sure that the quality of the product that we provide is in its purest possible form. India has the potential to become the biggest producer, consumer and exporter of cotton.

Cotton Guru analysis:

Considering market volatility and uncontrollable variables, Indian ginners must not go for speculative sales or forward sales of cotton. They must keep themselves abreast of the world cotton situation.

Leave a Reply

5 comments on “The Aftereffects of the Indian Cotton Export Ban: Part 2

  1. Excellent, Ginners situation become like a sandwitch between farmers and Exporter. Farmers argue for better price and Exporter reject by saying quality problem.

  2. Nagraj: Good, Ginners faced bad situation, i.e. 5000 bale were in stock and Exporters were not ready to take delivery by saying quality problems. And sold stock at low price. Government should think for advance policy.

  3. Good article, India has become the biggest producer, consumer and exporter of cotton. Government thinks on advance policy of Export Ban.

  4. Good one, Article given exact situation of Ginners problem. Export Ban affect very much loss on his factory and Bankers think for given loan to them.

  5. This is the Real Situation.We heard similar situation in Murtizapur[Vidarbha]Maharashtra India where Cotton Guru conducted a seminar for Seed Cotton Growers's Educative Seminar in Last Month.Farmers are rediverting to other crops like soyabean.

Cotton Production Stories
Cotton Production

Cotton Grower Acreage Survey: Growers Dialing Back Acres in 2015

January 5, 2015

The 2015 Cotton Grower Acreage Survey suggests cotton farmers could reduce cotton plantings by more than 10 percent this year.

Cotton Production

University of Georgia Sets PGR Requirements for 2015

January 22, 2015

The University of Georgia has updated its plant growth regulator requirements for cotton varieties for 2015.

Cotton Production

Tennessee 2014 Variety Trial Results Now Available

January 5, 2015

The 2014 Tennessee Cotton Variety Trial Results publication is now available online.

Planting

2015 Tennessee Cotton Variety Guide Available Online

December 16, 2014

The 2015 Tennessee Cotton Variety Guide is now available online.

Planting

2014 Mississippi Small Plot Trial Data Now Available

December 15, 2014

Data from the 2014 Mississippi Small Plot Cotton Official Variety Trial is now available through Mississippi State University.

Planting

AgriLife Extension’s On-Farm Cotton Variety Trial Data Available

November 26, 2014

The annual Replicated Agronomic Cotton Evaluation trial results for the South, East and Central Regions of Texas are now available from the Texas A&M AgriLife Extension Service.

News

Registration Open for Cotton Incorporated Crop Management Seminar

October 21, 2014

Cotton Incorporated will conduct its 2014 Crop Management Seminar on November 12-13 at the University of Georgia Tifton Campus Conference Center. And attendees can expect an economic and environmental focus on keeping cotton sustainable.

Around The Gin
Product News

Deltapine to Release Five Bollgard II XtendFlex Cotton Varieties

January 27, 2015

Following USDA deregulation of the Bollgard II XtendFlex cotton technology, Deltapine has announced plans to offer five new B2XF varieties for the 2015 season.

Product News

Bollgard II XtendFlex Cotton Poised for Limited Introduction

January 21, 2015

A limited introduction of Bollgard II XtendFlex cotton varieties is planned for the 2015 planting season through Deltapine and select licensees.

Product News

USDA Deregulates Dicamba-Tolerant Technologies for Cotton and Soybeans

January 16, 2015

The USDA has announced its decision to deregulate Bollgard II XtendFlex cotton and Roundup Ready 2 Xtend soybeans – Monsanto’s dicamba-tolerant trait technologies for those crops.

Product News

Bayer CropScience Anticipates Registration for New Cotton and Peanut Insecticide

January 15, 2015

Bayer CropScience anticipates the registration of Velum Total, the company’s newest insecticide/nematicide, for the 2015 cotton and peanut season in the Southeast.

Product News

New FiberMax and Stoneville Varieties for 2015 Feature GLT Technology

January 14, 2015

Bayer CropScience has announced four new FiberMax and Stoneville cotton varieties for the 2015 season.

Product News

PhytoGen Introduces 2015 Cotton Varieties

January 13, 2015

PhytoGen’s cottonseed portfolio for 2015 includes proven high yielding varieties, as well as new varieties featuring advanced insect, nematode and disease technologies.

Product News

Monsanto and FMC Renew and Broaden Crop Protection Agreement

January 8, 2015

Monsanto and FMC have agreed to extend and broaden their current relationship to help benefit cotton, corn and soybean growers through Roundup Ready PLUS Crop Management Solutions.

Product News

Deltapine Announces Class of 15 Cotton Varieties

December 16, 2014

Deltapine has announced two new high-yielding cotton varieties for its Class of 15, with several potential varieties awaiting regulatory approvals of the Bollgard II XtendFlex technologies.

Latest News
Cotton Production

University of Georgia Sets PGR Requirements for 2015

January 22, 2015

The University of Georgia has updated its plant growth regulator requirements for cotton varieties for 2015.

Cotton Production

Cotton Grower Acreage Survey: Growers Dialing Back Acres in 2015

January 5, 2015

The 2015 Cotton Grower Acreage Survey suggests cotton farmers could reduce cotton plantings by more than 10 percent this year.

Cotton Production

Tennessee 2014 Variety Trial Results Now Available

January 5, 2015

The 2014 Tennessee Cotton Variety Trial Results publication is now available online.

Production Outlook / Acreage

Rabobank: Fertilizer Supply May Outweigh Demand in 2015

December 30, 2014

According to Rabobank’s recent Fertilizer Quarterly report, fertilizer supply for 2015 appears to outweigh global demand, making the pricing forecast for the first quarter of the year rather cloudy.

Planting

2015 Tennessee Cotton Variety Guide Available Online

December 16, 2014

The 2015 Tennessee Cotton Variety Guide is now available online.

Planting

2014 Mississippi Small Plot Trial Data Now Available

December 15, 2014

Data from the 2014 Mississippi Small Plot Cotton Official Variety Trial is now available through Mississippi State University.

Cotton Production

High Quality Cotton Pays Off for the U.S.

December 10, 2014

It’s time to face facts. Quality cotton – especially U.S. high quality cotton – is now driving world demand.

Planting

AgriLife Extension’s On-Farm Cotton Variety Trial Data Available

November 26, 2014

The annual Replicated Agronomic Cotton Evaluation trial results for the South, East and Central Regions of Texas are now available from the Texas A&M AgriLife Extension Service.

News

Registration Open for Cotton Incorporated Crop Management Seminar

October 21, 2014

Cotton Incorporated will conduct its 2014 Crop Management Seminar on November 12-13 at the University of Georgia Tifton Campus Conference Center. And attendees can expect an economic and environmental focus on keeping cotton sustainable.

Harvest

Storms Shred Thousands of Cotton Acres in Arkansas

October 9, 2014

To date, Mother Nature has blessed the latter part of the cotton season – including early harvest – with favorable

Cotton Production

Updated Mid-South Defoliation Guide Now Available Online

September 16, 2014

With defoliation and harvest season nearing, the 2014 Mid-South Defoliation Guide has been updated and is ready for grower use.

Cotton Production

USDA Lowers U.S. Cotton Production and Export Estimates

September 11, 2014

Based on information contained in USDA’s September World Agricultural Supply and Demand Estimates Report, U.S. cotton production and exports for 2014 will both be down over earlier projections.

Cotton Production

Terminate Cotton Irrigation at First Cracked Boll

August 26, 2014

Darrin Dodds, Mississippi State Extension cotton specialist, says that when growers see the first cracked boll in their cotton fields, it’s time to terminate their irrigation program.

Cotton Production

Cotton Harvest Looking Good in Lower Rio Grande Valley

August 15, 2014

As cotton harvest begins in the Lower Rio Grande Valley of Texas, growers are optimistic that this year’s crop will help erase the disappointments of the last few growing seasons.

Cotton Production

NCC Commends Timely Implementation of STAX for Cotton

August 13, 2014

The National Cotton Council applauded the announcement that the Stacked Income Protection Plan – or STAX – will be available to upland cotton producers in 2015 through the federal crop insurance program.