Cotton prices dip in Karnataka after Centre lifts import duty

Cotton prices that had been rallying for the last few weeks have started declining, five days after the Union government lifted the 10% import duty till September 30.

Officials said the effect will be clearly visible in the next few weeks even as some farmers, already reeling under a string of problems including rain, are on tenterhooks fearing a price crash.

According to data from the Karnataka Agricultural Price Commission, even though the area under cotton cultivation in Karnataka increased from 7.76 lakh hectares (2019-20) to 8.2 lakh hectares in 2020-21, the total yield has come down.

The price of cotton rose to an average of Rs 11,100 earlier this week in the six major markets, including Chitradurga, Davangere and Raichur. However over the last two days, the price has come down to Rs 10,100.

“Only DCH cotton (a variety with extra long staple) has a good price of above Rs 17000 but very few farmers grow it. The price of BT Cotton has come down. However, the result of the Centre’s duty cut will be visible in the next few weeks when the imports start arriving,” an official in the agriculture department said.

Mahantesh Naik, agro-economics professor at the Dharwad University of Agricultural Sciences, said it is too early to say how the Centre’s move will affect the cotton farmers.

“It is true that the flood of imported cotton will lead to a price crash in the local market," said Naik. "The number of farmers who will be hit by a crash at present will be less as 80% of the local produce reaches the market in September-October. The Centre’s move is aimed at helping the mills. However, if the mill owners stock up on the cheap imported cotton, we will have a crisis."

L G Hiregoudar, Head of Krishi Vignan Kendra in Gadag, said the price of cotton in Raichur has come down from Rs 10,000 to Rs 9,000 between April 14 to April 19. “We still don't know if the Centre’s decision is the reason. However, it is true that whenever the international produce floods the local markets, our farmers will suffer,” he added.

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