Amid falling cotton exports and rising imports, there is a growing demand among cotton traders and associations in Gujarat to reduce the minimum support price of the crop.
According to Ajay Shah, secretary of Gujkot Vyapar Sangh, if the MSP remains the same, it could signal another nationwide drought for the cotton sector and the textile value chain.
"Implement a free market mechanism for cotton and give more subsidy to farmers," he said. The MSP mechanism is implemented by the government to support farmers by buying their crops at a pre-determined remunerative price.
The 2024-2025 MSP for cotton is Rs 7121 per quintal and Rs 7521 per quintal for medium and long-staple cotton varieties, respectively. This has further added to the challenges faced by cotton traders and mills, who are already struggling to remain competitive in the global market. Speaking to FE, Shah said, "By December 2024, we estimate that the government has bought about 60% of cotton stocks from farmers. Private players are buying less stocks due to the high MSP." Instead, many companies are importing cotton from countries such as Brazil, Australia, West African regions and the USA - which offer lower prices than India's MSP. For example, Brazil reduced its cotton export price to US$0.7060 per pound in October 2024 - a price 15.9% lower than the international market average.
