SIMA warns against cotton mishap

Coimbatore, Jun 16 (UNI) The Southern India Mills Association (SIMA) today appealed to the Centre to take remedial measures to save the textile industry from "extinction" it being the largest employment provider in the country for people below poverty line from rural areas, due to soaring cotton prices.

In a press release here, SIMA Chairman Dr K V Srinivasan said the current season saw a record 315 lakh bales of cotton crop. However, the domestic industry could not any derive benefit out of it.

On the other hand, textile mills were facing acute shortage of good quality cotton due to depleting exports and speculation of international buyers in the domestic market.

He said the textile mills were not able to break even with the abnormal cotton prices even after the slight increase in yarn prices. Cotton being a seasonal commodity and totally dependant on monsoon, it was very essential to maintain a comfortable buffer stock to manage unforeseen conditions and meet the customer requirements. Tamil Nadu, which accounts for more than 50 per cent of the spindleage was the worst hit, he said.

An analysis of the trend in cotton prices in 2004-05 and 2007-08 clearly establishes the link between stock to use ratio and cotton prices. In the cotton season 2004-05 the stock to use ratio was 37 per cent. Consequently, cotton price during the season 2004-05 was stable. In the subsequent cotton seasons, 2005-06 and 2007-08, the stock to use ratio had progressively declined from 24 per cent in 2005-06 to 21 per cent in 2006-07 and to 18 per cent in the current season 2007-08, he said.

The depletion in the stock to use ratio came about on account of rising exports of raw cotton 47 lakh bales in 2005-06 to a record exports of 85 lakh bales in 2007-08.

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