Most of the supplies in the markets are of raindamaged cotton and soyabean. Falling below the fair average quality (FAQ), the damaged produce does not qualify for MSP procurement by government agencies, say traders.
Till last week, rates of cotton, which had a high moisture content due to bouts of unseasonal rains, had gone down below the minimum support price (MSP) of ₹7,020 a quintal, even for long staple grade. Now, even the best grade cotton — with an acceptable level of moisture of up to 8% — is fetching a rate either below MSP or barely ₹20 to ₹30 above the level, say market sources.
The rates for good long staple cotton are in the range of ₹7,000 to ₹7,050 a quintal. However, the majority of the cotton arriving in the market has been damaged by rains. This produce is not fetching more than ₹6,000 to ₹6,500 a quintal, say market sources.
Vijay Nichal, a ginner and a cotton farmer at Mahalgaon in Yavatmal, says the market is flooded with discoloured cotton which has been damaged due to rains. The low temperature may prevent further boll formation, he says.
The MSP for soyabean is ₹4,600 a quintal. However, the majority of the supplies in the markets are of a lower grade due to rains. The best quality soyabean is fetching ₹4,800 a quintal, but the market mainly has damaged soyabean, said a trader at the agriculture produce market committee (APMC) yard at Kalamana. However, at Wani soyabean is fetching around ₹5,500 a quintal but farmers are hardly left with any produce with them, a trader said.
Tukaram Jadhav, a farmer from Ghatanji in Yavatmal, said he could harvest around 3 quintals of soyabean while the rest of the crop could not be salvaged. He is expecting to get around ₹4,700 a quintal for the produce. The cotton that he has will not get more than ₹6,500 a quintal, he says.
Manish Shah, a cotton trader, said the rates of lint have come down to ₹25,000 a bale from ₹28,000. The international market is bearish too. The traders are demanding that the government should do away with the reverse charge mechanism (RCM) on cotton which may enable them to increase the prices for farmers.
RCM is a tax payable on purchase of material under the GST regime. This is applicable on select items including cotton. Generally, GST is payable only on sale of commodities, but certain commodities are under RCM.
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