NEW DELHI — Cotton output from India, the third largest producer of cotton globally, is expected to set a new record in the coming year, increasing by 9 percent in 2011 to 2012.
Although prices have dropped by almost half from March, farmers have invested in sowing more cotton based on last year’s high prices. Cotton prices in India have fallen by more than a third since hitting a record high of 61,700 rupees, or $1,371 at current exchange, per candy in March.
A move by the Indian government has helped both cotton growers and international buyers as the government allowed exports without restriction for a period of two months, August and September. Exporters only need to register with the Directorate General of Foreign Trade to have the unlimited export. “It is a relief to exporters after the cap of 5.5 million bales,” said an analyst.
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Export of raw cotton was banned by the government in April 2010 following the extremely volatile price of the fiber. Exports were allowed again in November last year with a cap. For the coming season of 2011 to 2012, there is expected to be a cap of 7 million bales.
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Panabaaka Lakshmi, minister of state for textiles, said that the area under cultivation in 2011 to 2012 is expected to reach 1.2 billion hectares. According to the Cotton Advisory Board data, the spinning industry’s closing stock for fiscal 2011 would be three times that of the previous year, and the increased supply would result in lower prices.
Although cotton prices have come down substantially, apparel prices, which went up by more than 30 percent during the last ten months because of the shortfall of cotton, have not declined. “These policy measures need to be related together to influence the whole market,” said a government official. He mentioned that the World Cotton Research Conference, which is being held in Mumbai from Nov. 7 to 11, may influence research and technology and also benefit policy making.
The conference is organized once every four years and is being held in Asia for the first time. It is being organized by the Indian Council of Agricultural Research along with the Indian Society for Cotton Improvement and the International Cotton Advisory Committee, Washington.