COTTON SUNSHINE INDUSTRY

The growth story

Cotton offers a livelihood to 5.8 million people who are engaged directly as cotton farmers. Across the country, 62 per cent cotton is being produced on rain fed areas and 38 per cent on irrigated lands. There has been an increased inclination by farmers to increase the area under Bt cultivation as it helps increase net earnings. 2011-12 saw the acreage under Bt cotton reach around 11.12 million hectares of the total area of 12.18 million hectares.

Types of cotton grown in India

1.   Gossypium arboreum
      (Asian cotton)

2.   Herbaceum (Asian cotton)

3.   G. Barbadense
      (Egyptian cotton)

4.   G. Hirsutum (American
      Upland cotton)

The cotton availability in the cotton season 2011-12 stood at 6.98 milion metric ton which was seven per cent higher than the previous year. The yield per hectare for 2011-12 was recorded at 493 kgs per hectare which was 24 kgs per hectare lass than the previous year. Cotton is grown in three agro-ecological zones of the country [North, Central and South Zones.

State-run Cotton Corporation of India (CCI) has already purchased around 1.3 million bales (of 170 kg each) in the current marketing year that stated on October 1, 2012 and most traders expect it to buy another 7 million bales.

The global scenario

55 per cent of the world cotton is grown by three countries of the world. China tops the chart with 28 per cent share followed by India at 23 per cent and USA with 14 per cent. While these three countries carry out the major production; China, India and Pakistan account for 70 per cent of the consumption of world cotton. Global trade increased by 27 per cent in 2011-12 in the cotton season.  The cotton season 2012-13 began at a better note with better and higher prices.

The EXIM dynamic

India has now been dislodged from the second spot when we talk of cotton exports. M. Rafiq Chaudhry, Head, Technical Information Section, International Cotton Advisory Committee confirms, “India is a major exporter of cotton: it was the second largest exporter from 09/10 to 11/12, however we are projecting a significant drop in exports this season, due to a decline in production and a rise in consumption.” The Government of India is playing a significant role in aiding this industry. Data compiled by the Directorate General of Foreign Trade under the Ministry of Commerce and Industry showed in November 2012, registration for exporting cotton yarn stood at 100 million kg, 32 per cent higher than in the year-ago period and five per cent more than in the previous month. 

Price wars

The price for cotton changes frequently and it is usually determined by the willingness that the country shows to export the surplus. Chaudhary says, “Cotton prices in India are shaped by supply and demand factors. In addition, they are also influenced by government actions, in particular the purchases of cotton by the CCI this season.”

The minimum support price for cotton procurement has moved a notch higher and will act as the base price at which Indian cotton prices will operate. As per the Cotton Corporation of India, taking into consideration of the recommendation of CACP the Ministry of Agriculture had fixed MSP for two basic varieties of cotton viz. Medium Staple length cotton having staple length of 24.5 mm to 25.5 mm with micornnaire value of 4.3 to 5.1 and long staple length having 2.5 per cent staple length of 29.5 to 30.5 mm with micronnaire of 3.5 to 4.3 of new crop of seed cotton (kapas) of Fair Average Quality (FAQ) for cotton season 2012-13.  The support price for medium staple length cotton has been fixed at `3600 per quintal and for long staple at `3900 per quintal.

The linkage

Processing of cotton declines the last fiscal but is steadily moving ahead. The Cotton Corporation of India (CCI) is selling cotton based on quality parameters. Textiles contribute four per cent to GDP, 14 per cent to the industrial production and 17 per cent to the country’s export earnings. It employs direct employment to over 35 million people. V Srinivas, Joint Secretary to Government of India tells, “India’s textiles industry valued at USD 110 billion is expected to grow at 15 per cent in the 12th Plan. An Integrated Processing Sector Development Scheme with emphasis on establishing Processing Parks and upgradation of existing dyeing industry has been proposed for implementation. In addition Government is also targeting skill development initiatives for meeting the requirement of 11 million trained textiles workers in the 12th Plan. India encourages industry investments in cotton ginning, spinning, weaving, knitting, processing and garmenting through the Technology Upgradation Funds Scheme (TUFS) which is a back ended interest reimbursement program for moderation of interest rates and some elements of capital subsidy. TUFS has catalyzed industry investments of `200,000 million with nearly 50 per cent of investments in spinning sector. India also implements the Scheme for Integrated Textiles Parks which provides common infrastructure through State subsidies for green investments in textiles parks.” Emphasising on the processing of cotton, Rashim Jindal, President – Marketing & Raw-Material, Sportking India says, “We currently process about 40,000 meters of cotton every year with an increase of about five to seven per cent per annum. We processed about 30000 meters of yarn every year which is bought by all leading national and international brands. While 30 per cent is used up in the domestic market, 70 per cent is exported. The demand for cotton is improving year on year. With MSP, earning of farmers has increased and spending power has also gone up. Being a natural product with advancement of farming conditions, cotton share in textile is increasing and it will keep on increasing every year.”

The retail connect

People are now moving back to the use of cotton clothing than the synthetic fibres. As summers are becoming scorching hot by the year, people prefer to stay cool in cotton fabrics. When asked, about 87 per cent of the consumers said they give cotton clothing preference over any synthetic fabric. As such, the demand for the same is also on a rise urging the retailer to increase their share in cotton offerings. NTC is among the top clothier to the nation. K Ramachandran Pillai, CMD, NTC says, “NTC will strive forward to be the number one clothier to the nation today and to the world tomorrow. NTC from a Yarn centric organisation will become a fashion centric organisation in the coming years.” At Madame, 130 tons of cotton yarns are used per annum for the production of clothing. They use 30 Single, 2/30, 2/40 Acrylic Cotton, 40 SI and 34 SINGLE for their production.

Dr A Sakthivel, Chairman AEPC, stated that, “Apparel exports for the month of October 2012 were to the tune of USD 907 million, with decline of .75 per cent against the corresponding month of last financial year. In rupee terms, the exports have increased by 6.83 per cent in October 2012-13 over the same month of previous FY. Buyers are not putting more orders due to the economic turbulence in their economy specifically in Western Europe, USA and Canada. Besides, the economic turbulence there is a stiff competition from the Vietnam and Bangladesh in US market and from Turkey in EU market, respectively. Most of the share of India is bitten by these suppliers.” 

Organic cotton

Organic cotton refers to cotton that helps improve soil fertility, water quality and pest control. The process of growing organic cotton is always certified; if not then claiming to be selling organic cotton is illegal. The certification is a three year process. It satisfies the three elements of sustainability: economic, social and environmental. The top organic producing nations are Indian, China, Syria, Turkey and United States. Germany, Switzerland, UK, Sweden, USA and Japan are major markets of organic cotton in the world. The production in India fell by 48 per cent from 195,412 tons to 102,452 tons due to stringent laws which will eventually help its production. The trend for growing and consuming organic cotton is on a high. In 2011-12, India had the largest biotech cotton area, with an estimated 11 million hectares, accounting for 47 per cent of the world total.  There are five international organisations working in India to promote organic cotton.  The price for organic cotton is higher than growing other varieties of cotton. Deepak Aggarwal, CEO, Gron Stockholm, an organic kidwear brand tells, “We buy about 1000 kilos of organic cotton for our products. India is a big producer of organic cotton but the smallest consumer for it. As we are also an export company, we have seen the demand for organic cotton grow significantly in Northern and Central Europe. The numbers for organic kidswear have shot up from being negligible to a whopping 33 per cent.” 

Pre-requisites for Organic Cotton Farming

a.     Synthetic fertilizers like Urea, DAP, NPK cannot be used.

b.     Synthetics pesticides like herbicides, insecticides, fungicides etc are not to be used.

c.     Need to prevent spray drift from the surrounding fields –used border framing;

d.     No use of genetically modified organism such as Bt cotton.

e.     Crop rotation is a must –no repeat crop in the same field for 2 subsequent years and/or intercropping.

f.     Proper maintenance of records and documents for certification.

Future

The Government has proposed to set up state of the art processing parks in seven states to strengthen infrastructure in the processing sector. As the need is growing, the industry is also making its way up. Availability of subsidy and credit to weavers to take up an expansion of 200,00 shuttle-less looms per annum is also on charts to give the needed impetus to the cotton and textile industry. For the year, India’s Cotton Advisory Board has estimated production at 5.7 million tons, consumption at 4.6 million tons and 1.2 million tons for export. The acreage under the cultivation of cotton is expected to decrease by four per cent to around 118 lakh hectares. The Cotton Advisory Board, has projected cotton production during 2012-13 cotton season at 334 lakh bales of 170 kgs each. The textile ministry forecast cotton yarn production to rise in 2012-13 financial year.