Cotton prices rise amidst supply shortages

Cotton prices have gone up to record highs this season, due to a combination of factors. Reduced acreage, adverse weather conditions, and pest outbreaks have significantly curtailed cotton production in India. Supply shortage has led to a price increase of 3 per cent above the Minimum Support Price (MSP).

Farmers, who suffered heavy losses last year due to pest infestations and low yields, have been hesitant to cultivate cotton this season. As a result, the area under cotton cultivation has declined by 11 per cent compared to the previous year, particularly in key producing states like Maharashtra, Telangana, and Andhra Pradesh. Heavy rains in major cotton-producing states have further exacerbated the situation, damaging crops and hindering sowing.

The impact of rising cotton prices is being felt across the value chain. Wholesale markets have witnessed a sharp increase in cotton prices, with some regions reporting rates as high as Rs 12,222 per quintal. This is likely to put pressure on textile manufacturers and exporters, who may face higher input costs.

The government's decision to increase the MSP for cotton has provided some relief to farmers. However, the widening gap between MSP and market prices suggests that further price hikes are imminent. As cotton prices continue to escalate, it becomes crucial for stakeholders to explore strategies to mitigate the impact on both farmers and the textile industry.