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Saturday, May 2, 2015

India Minimum Support Price for Cotton Increasing

In a bid to dispel the mounting distress of its cotton growers, India’s government on Wednesday April 29, 2015 announced it was increasing the commodity's minimum support price (MSP).

How will this effect the cost of apparel manufacturing in India?

The following is portion of a news article posted on the Sourcing Journal on April 30, 2015:
The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, has raised the MSP (a government support program that guarantees a price level paid to farmers to procure their produce) of medium and long staple cotton by 50 Indian rupees (or 70 cents) per 100 kilograms each for the year 2014-15, a scant increase over such previously fixed prices as 3,750 rupees and 4,050 rupees for certain varieties.  
As the world’s largest producer and second-largest seller of cotton, India is estimated to have a cotton surplus of nearly 16 million 347-pound bales this year, while the U.S. Department of Agriculture forecast a fall in exports of 58 percent year-over-year. “This operation is primarily aimed at safeguarding the interest of the farmers and avoiding any distress sale,” declared an official statement from the CCEA. 
Earlier in the season, declining exports due to a global surplus and slack demand from China caused cotton prices to slip below MSP levels, obliging the CCI to actively enforce guarantees by purchasing and stockpiling the equivalent of nearly seven million 480-pound bales from domestic producers. Last month, the agency started auctioning its inventory at prices near MSP levels, but these were not low enough to garner the interest of Indian mills and led to multiple media reports citing an “artificial shortage” of the raw material.   
Read the full article at https://www.sourcingjournalonline.com/india-raises-minimum-cotton-price-hurt-domestic-mills-lm/

Cotton pricing in India clearly has an important role in regard to worldwide fabric and fashion pricing.  The pricing of India's cotton is certainly something that members of the apparel industry need to watch.

You can learn more about cotton from India here on Apparel Search.  You may want to check the following:

The Cotton Corporation of India (CCI)

Commission for Agricultural Costs and Prices (CACP)

Minimum Support Price (MSP)


The Department of Agriculture & Cooperation (DAC)

Thank you for taking the time to read our textile industry blog post. We hope that you have found this news to be informative. If you have comments or questions, please add your thoughts in the discussion area below.

Do you think it is appropriate for governments to provide minimum support pricing for cotton and other textile fibers?  Is this a manipulation of pricing that is fair for the worlds economy?  Share your thoughts.

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