India Saga Continues: Farmers Want More Exports

By Jim.Robinson|December 16, 2010

In a continuing back-and-forth export debate that has been one of the most closely watched developments of the year, cotton farmers in India are demanding that the government raise its limit on exports from 5.5 million bales (170 kg) to 9 million bales, an increase of almost 64 percent.

Farmers voiced their demand after meeting with Sharad Pawar, India’s Minister of Agriculture, on Dec. 13, and comes as the Indian government is deciding how to deal with its messy export situation. Officials have been caught in a very public battle between two powerful lobbies–cotton growers and exporters on one side and the domestic textile industry on the other.

A compromise was reached earlier this year that would have allowed exporters to ship up to 5.5 million bales of cotton. Although every bale of the limit was registered in time, the compressed schedule (and very congested ports) didn’t allow exporters to physically ship 2 million of those cotton bales by the established deadline of Dec. 15. Key figures in the Indian government are reviewing their options on how to deal with a situation, knowing that whatever they decide, they will surely make one of the powerful groups very unhappy (see previous story).

Growers are believed to have put forth the argument that, as officials had intended, the previously established cap on exports helped the textile manufacturers by cooling off red-hot cotton prices and ensuring sufficient demand to meet domestic needs.

However, farmers and exporters believe the effect has gone too far and is now suppressing prices (from $1.34/lb. in October to $1.14/lb. now)–especially in light of the better-than-average cotton crop of up to 34 million bales that is expected for the current season (Oct. through Sept.). Government officials say they will take the farmers’ demands into account when they meet to determine the next steps in this ongoing tug-of-war.

Be sure to watch for Cotton International’s March issue for a comprehensive report on the cotton and textile markets in India!