Higher support prices hit Gujarat cotton-ginning industry

Ahmedabad, Nov 26 : The Cotton ginners in Gujarat are facing a hard time as the Government has raised the Minimum Support Price (MSP) by almost forty percent.

Gujarat is considered to be the hub of the cotton producers who say the rise in the prices may bring the industry to a standstill as the ginners find the purchasing prices of cotton higher than the selling price of processed cotton.

The medium staple variety is ranging around 2,850 rupees per quintal this year, whereas the long and extra long staple variety ranges upto 3,000 rupees. MSPs of both the varieties are 40 percent higher than last year.

Reportedly the aggressive buying by the government has helped the minimum support price sustain in the market to the benefit of farmers.

But sources in the cotton industry said that if the trend continues, it would ultimately affect the cotton sales.

The ginners are demanding a bailout by the government after the plummeting of world cotton prices has dampened the exports.

"If we try to understand the impact of this rise on the cotton trade in Gujarat, the government has in a way tried to create a monopoly in the market. The government rates are very high and this means that the business of the private ginners would be very low. And because of this, the ginners would incur heavy losses. Last year the exports were almost worth 150 billion rupees, but this year I don't think even 10 percent of it can be achieved," said Saurin Parikh, General Secretary, All Gujarat Gilding Association.

The central government's decision to increase MSP of raw cotton from 406 rupees for 20 kilogram of cotton to.570 rupees for 20 kg for 2008-2009 fiscal has forced ginners to either shut down their factories or cut down their working hours.

This has adversely affected the livelihood of the daily wage workers who now find it difficult to make their ends meet.

"We don't know any other work other than this. But the situation is very bad, as the workshops remain closed for almost three days in a week and for the rest four days, the factory remain open only for eight hours for day. The money that we make in this much time is not even sufficient for ourselves. How do we support our family who are dependent on us?" said Achlaram Chaudhary, a daily worker.

On an average, Gujarat produces 10 million bales of cotton annually constituting almost one-third of the country's overall production. Four million people are directly or indirectly employed in this trade. Gujarat has at least 1,100 ginning units out of which only 25 per cent are functional.

It's not only the ginning industry that has been affected due to the increase in minimum support price of cotton but the spinners, textile and apparel mills have also been affected. By Ami Sharma

ANI