Cotton price crisis: Rs 800 below MSP, farmers in loss
By yash chouhan 2025-11-25 17:12:36
Cotton Price Crisis: Cotton prices have fallen ₹800 below the MSP, benefiting the industry but causing losses for farmers.
Cotton prices in the country are continuously falling, and farmers are receiving prices ₹700–₹800 below the MSP. While zero import duty is significantly benefiting the textile industry, rising imports and weak demand are preventing farmers from receiving fair prices for their produce, forcing them to shift away from cotton and toward other crops. After soybeans and maize, cotton is now next in line. Cotton prices in the country are continuously falling. Government data shows that farmers are receiving rates ₹700–₹800 below the MSP. Regarding the Minimum Support Price (MSP), the central government has fixed the rate at ₹7,710 per quintal for medium-staple cotton and ₹8,110 for long-staple cotton. Currently, the market is seeing the majority of arrivals of medium-fiber cotton, which is trading at ₹6,988, compared to the MSP of ₹7,710. This rate information is provided by the government agency AgMarknet.
This decline in prices comes at a time when the central government has reduced the import duty on cotton to zero. The decline clearly indicates that traders and mill owners are benefiting from this government decision, while farmers are struggling to secure MSP. This clearly indicates that farmers have suffered a significant financial blow following the zero import duty. If this situation continues, farmers will further reduce cotton cultivation.
Low Inflows, Low Prices Government data shows that the model price received by farmers has declined in contrast to the rapid increase in the MSP. Surprisingly, cotton arrivals in the markets have fallen over time. A common trade rule is that when imports and supplies fall, the price of the product rises. However, this did not happen with cotton. Instead of rising, its prices fell, and the main reason for this is the zero import duty.
Benefits for mill owners, losses for farmers India has zero import duty on cotton. This means that any trader or miller in the country can import cotton at zero import duty. The government has extended this until December 31st. The government argues that zero import duty will stabilize the cost of the textile industry, which will help textile companies and increase the purchase of cotton from farmers.
The government's argument is in accordance with the rules, but on the ground, it seems to be showing no benefit. The situation on the ground is that farmers are suffering losses. If there were any benefit, they would receive good prices for cotton. The situation is such that farmers are not even able to get the MSP for cotton. On the other hand, textile companies and mill owners are benefiting.
Agriculture will be devastated Cotton expert Vijay Jawanghia says about this trend, "Zero import duty will reduce the price of cloth by 2 to 2.5 rupees, directly benefiting mills and traders." According to one estimate, this import duty decision will benefit the textile industry by 15,000 crore rupees, while farmers' entire agriculture will be devastated. Its impact is already visible, as farmers are now shifting their focus from cotton to pulses and oilseeds. This is directly due to falling cotton prices and zero import duty.
Loss from Imports A simple principle of agriculture and trade is that when goods start coming from abroad, local production begins to decline. The government is also aware of this principle, yet zeroing the import duty on cotton until December is unimaginable, as the cotton season begins in October and the Cotton Corporation of India (CCI) begins procurement. Considering the cotton imports, they continue to rise.
How much did imports increase? Government data shows that while imports in 2023-24 were 1,550,312 bales (one bale contains 170 kg), they increased to 4,139,941 bales in 2024-25. While cotton imports increased, cotton cultivation in the country declined. Despite this, farmers did not receive good prices. The reason is the purchase of cotton from abroad. When mills and traders can easily obtain foreign goods at low prices, why would they buy cotton from domestic farmers? This has caused frustration among farmers, and they are turning to other crops instead of cotton.
How much is the price? Global trends are also being blamed for this price situation. This means that cotton purchases worldwide are sluggish, leading to a decline in demand for Indian cotton. Experts say that due to weak demand and global price trends, prices are remaining below the MSP. Therefore, it is expected that the Cotton Corporation of India (CCI) will provide relief to farmers by purchasing at the MSP. However, this relief will only be effective if farmers receive the MSP price.
The CCI's purchases reveal that raw cotton prices in private trade are hovering between Rs 6,500 and Rs 7,500 per quintal, which is lower than the MSP of Rs 8,100.
Clearly, when even government agencies are not providing MSP rates to farmers, what can farmers expect from traders? Overall, MSP has become a distant dream for farmers; they hear about it, but they cannot get it. Now, farmers' entire hope rests on the government to intervene in the market and ensure that cotton receives the MSP.
