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Cotton price is expected to increase in the range of 8-10 per cent for the ongoing cotton season following strong demand from both domestic as well as international markets, according to a report.
The cotton price is expected to increase with a marginal cut in the production estimate and producers increasing prices following rising prices of man-made fibres, which went up due to high crude oil prices, Care Ratings said in a report. Also, it said, demand for raw cotton as well as cotton yarn in the international markets, mainly China and Bangladesh, has been on an upward trend and is expected to continue to increase going forward. The prices are likely to increase in the range of 8-10 per cent for the ongoing cotton season, it added.
This downward revision in production is largely attributed to the pink boll-worm infestation on cotton crops in many states including Maharashtra, Andhra Pradesh and Telangana, it said. The current year’s output estimate is, however, still higher by about 6 per cent compared with the production in Cotton Season (CS) 2017 which stood at 350 lakh bales, it said.
Meanwhile, Care Ratings said, in line with the cotton prices, the cotton yarn prices have also witnessed an increase during the period on back of increased demand from international markets mainly China following its trade war with the US along with rupee depreciation. China has imposed a 25 per cent duty on import of cotton from the US and is meeting its demand by increasing imports from India, it added.
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The United States, the world’s biggest exporter of the fibre, has cornered the bulk of Chinese imports for at least a decade. But China’s decision to impose a 25 percent import tax from July 6 on American farm commodities, including on cotton, in retaliation for tariffs enacted by the administration of U.S. President Donald Trump will allow India to grab a bigger share of the Chinese market.
India’s cotton shipments to China could grow five-fold to 5 million bales (850,000 tonnes) in the next crop year as exporters rack up orders amid a trade war that is forcing the world’s top consumer to look for other sources of supply.
The United States, the world’s biggest exporter of the fibre, has cornered the bulk of Chinese imports for at least a decade. But China’s decision to impose a 25 percent import tax from July 6 on American farm commodities, including on cotton, in retaliation for tariffs enacted by the administration of U.S. President Donald Trump will allow India to grab a bigger share of the Chinese market.
“In the last few weeks we are getting good inquiries from China for the new season crop,” said Arun Sekhsaria, managing director of D. D. Cotton, an exporter that earlier this month sold cotton to China for shipments in November and December.
“If the 25 percent duty stays there as announced, then India could export 5 million bales to China,” he said.
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India has already signed contracts to ship 500,000 bales (85,000 tonnes) of their new season harvest to China, officials said last week, in rare advance deals.
In response to U.S. tariffs on $50 billion in Chinese goods, Beijing slapped import taxes on cotton, as well as on other commodities and products from the United States, even as its own state reserves of the fibre are depleting.
“Everybody is worried about the trade war nowadays so everyone is switching from the U.S. to other origins,” said a Chinese trader.
Once the world’s top cotton importer, China has seen its imports shrink from more than 5 million tonnes in 2011/12 to around 1 million tonnes last year, mainly due to efforts to reduce its state stockpiles.
But, as the inventories work down, China has begun allowing more imports. Last week, China approved 800,000 tonnes of additional cotton import quotas for 2018, the first time it has given any additional quota in five years.
China is set to return as a major cotton importer, taking 10 million to 15 million bales (2 million to 3 million tonnes) a year by 2019/20, compared with 5 million bales this year, according to Tim Bourgois, head of the cotton platform at Louis Dreyfus Company.
“Chinese demand is huge. This is an opportunity for India to raise exports,” said Atul Ganatra, president of the Cotton Association of India.
Strong demand from China could help lift India’s overall exports to as much as 10 million bales in 2018/19, highest in five years, as demand from traditional buyers like Bangladesh, Vietnam and Pakistan also remains healthy, said Ganatra.
For the 2017/18 crop year ending on Sept. 30, India is likely to export around 1 million bales to China, Ganatra said.
QUALITY CONCERNS
Chinese buyers would first try to replace U.S. cotton with machine-picked, non-contaminated fibre from Australia and Brazil, and then they would go for Indian cotton, said a Beijing-based trader with an international company.
Indian cotton is not free of impurities such as bits of leaves and empty bolls, but if buyers have no other origin to choose from, they will pay extra to get rid of the contaminants, another China-based trader said. The extra cost would still be cheaper than paying a 25 percent duty on U.S. cotton imports, the trader said.
China is familiar with Indian cotton, and previously would buy as much as 6 million bales a year, said Nayan Mirani, partner at cotton exporter Khimji Visram & Sons.
At present, India also benefits from a depreciating rupee and nearness to China as compared with other competitors.
Along with lower freight rates, shipments from India reach China in about two weeks compared to an average of three to six weeks from other producers Australia and Brazil, dealers said.
“India will benefit not only because of the tariffs, but because emerging nations’ currencies have generally lost value against the dollar in the last couple of months,” said Gabriel Crivorot, an analyst at Societe Generale in New York.
“This makes Indian cotton look much more attractive than it did a short while ago, relative to American cotton.”
U.S. cotton futures have lost 9 percent since the China duty was announced on Friday, while Indian cotton futures have dropped 4 percent.
Indian exports would largely depend on surplus output, said Vinay Kotak, a director at Kotak Commodities, a Mumbai-based brokerage.
“If India manages to produce a bigger surplus, then it can certainly export more as the demand is there.”
With monsoon in a lull phase, farmers have sowed only 2 per cent of the total crop area so far. And with only 16 per cent water left in the state’s major dams, aagriculture is the most hit sector.
According to the Department of Agriculture of Maharashtra, sowing activities have declined by 2 per cent compared to last year. “However, we are not yet worried. We are expecting good monsoon even though it is delayed. So far most of the agricultural activities are taking place in Kolhapur, Konkan and North Maharashtra region that produces paddy and cotton,” said Bijay Kumar, Additional Chief Secretary, (agriculture).
According the to Water Resource Department, reservoirs in Maharashtra have only 16 per cent of water stock left. “The Nagpur and Amarawati region is worst affected with only 10 per cent and 13 per cent water left in the dams respectively. While in Pune it is 15 per cent , 18 per cent in Marathwada, 33 per cent in Konkan and 18 per cent in Nasik region. Vidharbha is most worst affected region,” stated in the data.
Bijay Kumar said that farmers have been asked not to hurry. “Let there be the satisfactory rainfall, only then they can start sowing and planting activities. Meanwhile, we have been in touch with the seed manufacturing companies in terms of shortages. However, there is no need to press the panic button yet,” Bijay Kumar added.
Sources in the agriculture department told DNA that if the monsoon gets delayed for one more week, then “farmers will not able to sow the green gram crops”. “This is a very short period crop that has to be sown in June. If it gets delayed it would not be able to sustain the insect attack later. This may impact pulses productions in Maharashtra. In June, most of the pulses, particularly green grams are sowed. Last year, we had surplus production of pulses,” said an official requested anonymity.
While Bijay Kumar admitted the tricky situations for the green gram sowing, but he is confident that shortage of green grams can be compensated by other pulses.
Nanasaheb Patil, president of Shetkari Kruti Samitit said that erratic and delayed monsoons every year is affecting the agricultural sector. “There is no consistency in rainfall. This year, the situation is scary. The government should not take it lightly. It should be ready with a contingency plan. Otherwise, the number of farmer’s suicides in Maharashtra will increase. The irrigation supply has also gone down. Most of the wells and tube wells have also dried up,” Patil said.
For Sanjay Jadhav, a farmer from Jalgaon who has resorted to drip irrigation to water 20 acres of cotton is not better off. “The ground water level has gone down drastically. We have invested heavily. Only a good monsoon can help us out,” Jadhav said.
GANDHINAGAR: Taking a first step towards streamlining fiscal incentives under Goods and Services Tax(GST), Gujaratgovernment has decided to reimburse 2.5% of State Goods and Services Tax (SGST) in lieu of sops offered to industries in the previous Value Added Tax (VAT) regime. To begin with, the SGST reimbursement incentivewill be made available to the textile industry, and other sectors will be extended these benefits in a phased manner.
The state government is in final stages of amending various state policies, including the industrial policy, to replace VAT incentives with sops under GST. The government will first amend textile policy to offer SGST sops to the textile sector. “After a series of consultations with various industrial stakeholders, the state government has decided to reimburse 2.5% SGST as fiscal incentive under GST. Under VAT regime, the state government used to offer fiscal incentives such as VAT refund,” said a key source privy to the development.
The state government is gearing up to roll out SGST incentives with textile industry held at top priority as the sector employs a large number of people. “The SGST incentives will be extended to other industrial sectors later on in a phased manner as the state government is currently evaluating the possible financial burden on the exchequer on account of these sops,” the source added.
Although the industries want higher percentages of SGST to be reimbursed, the state government wants to begin with a rate of 2.5%.
Gujarat government is under pressure from the industries to offer fiscal sops under GST regime as fiscal incentives under VAT ceased to exist after GST implementation. With the government yet to finalise any policy decisions with regard to incentives under GST, industries, both large and small, are facing troubles.
“Industries and traders are already facing a lot of challenges as the state government has stopped all financial incentives under VAT for almost a year now. To boost the industries and trade sector the government needs to give minimum 5% reimbursement against the SGST paid,” said Jaimin Vasa, newly elected president of the Gujarat Chamber of Commerce & Industries(GCCI).
“Since the industries have stopped getting VAT refunds or reimbursements since GST came into force in July 2017, the industries also demanded compensation in form of arrears. However, the government will take a call on it shortly. As far as other schemes for micro, small and medium enterprises (MSMEs), large and mega industrial projects as well as other sectoral policies are concerned, the state government will take a separate decision,” said a source close to the development.
‘The Cotton Textiles Export Promotion Council (Texporcil) is expecting a correction in the duty tariff on the export of cotton yarn from the country to China which was reduced from 603 million kg in 2013-14 to 315 million kg in 2017-18.
Texprocil chairman Ujwal Lahoti said here on Wednesday that Vietnam emerged as a major competitor for India in terms of the export of cotton yarn to China, the largest importer, taking advantage of duty free access to the country.
Though cotton yarn exported from India was superior in quality, the export reduced due to duty tariff of 3.5 % to 5%, he said.
“Texprocil is taking efforts to bring down the duty tariff. We have already represented the issue to forums like Asia Pacific Trade Agreement and Regional Comprehensive Economic Partnership (RCEP) and the Union Ministry.
“They have assured us positive changes in the tariff. India will get an upper hand over Vietnam only if the duty issue is addressed,” said Mr. Lahoti.
According to Mr. Lahoti, a major chunk of mills from China shifted to Vietnam in the last five years, making it a conversion centre. Yarn produced in Vietnam thereby enters China without duty tariff, he said.
Vietnam, which had exported 287 million kg of cotton yarn to China during 2013-14, bettered its position and overtook India during 2017-18 by exporting 718 million kg. Currently, Vietnam’s export is 228 % of India’s export to China. Though India remains the largest exporter of cotton yarn in the world, the country’s share declined to 25% in 2017 from 30 % in 2015. Meanwhile, cotton yarn export from Vietnam, the second largest exporter with 19.94% share in the global market, increased to 881 million kg in 2017-18 from 250 million kg in 2012-13, registering a growth rate of 252 %.
Mr. Lahoti said various issues of refunding related to embedded taxes, as in the form of duty for electricity and petroleum products used in the cotton textile value chain, need to be addressed if exports had to pick up.
Farmers of Punjab will go hi-tech in the coming days. Soon, you will see a drone along with a farmer holding its remote and spraying insecticides in his fields.
The Farm Machinery and Engineering Department of the Punjab Agricultural University (PAU) is working on the project. If all goes well and experts of the agri varisty are satisfied with results then drones may soon be seen spraying insecticides in fields.
Dr Manjit Singh, head of the Farm Machinery and Engineering Department, PAU, said, “The university will be doing practical application of using drones for spraying in paddy and cotton fields. A private company is providing technology to the university.”
“The experiment will also be done on the upcoming paddy crop and after that on the cotton crop. We are hopeful that this will turn out to be labour saving and cost effective. Experiments are on. Its effectiveness will be known only after we are through with our experiments,” he said.
“If we are satisfied with results then farmers will be acquainted with this technique. Four nozzles will be fixed on a drone for spraying. It will also help in spraying at a faster speed,” he added.
“Using a drone will be a costly affair, but for the convenience of farmers they will be able to get it on rent. Presently, farmers face many difficulties while spraying insecticides and pesticides. If a farmer sprays himself it takes a lot of time. Sometimes, it also results in health problems. If he sprays with the help of a tractor it results in crop loss. Drones will be an effective alternative for farmers to spray crops,” said Dr Manjit.
Drones can spray pesticides in fields in only half an hour. Farmers can also monitor the quality of crop with thermal sensors. Drones can work wonders if advance image processing unit is integrated with these.
The government has cleared pending GST refunds to the tune of Rs. 38,062 crore to exporters so far, the Central Board of Indirect Taxes and Customs said on Wednesday.
“In all, Rs. 21,142 crore (IGST refunds), Rs. 9,923 crore (RFD-01A refund by CBIC) and Rs. 6,997 crore (RFD-01A refund by states), all totalling Rs. 38,062 crore has been sanctioned till June 16, 2018,” the CBIC said in a statement.
During the CBIC’s refund fortnight, pending refunds of integrated GST (IGST) of exporters based on shipping bill were cleared. Also, those businesses making zero rated supplies or those wanting to claim input credit, were given refunds.
Without a level playing field and burdened by high transaction costs, inadequate export benefits, the Indian textile industry’s export competitiveness is taking a hit.
The industry has sought a hike of the duty drawback incentive to 3-4 per cent ( at 1 -2 per cent now) and extinguishing of embedded tax (in the GST regime such as electricity duty and on petroleum products) to be able to bounce back, Ujwal Lahoti, Chairman, The Cotton Textiles Export Promotion Council (Texprocil) said.
Highlighting the opportunities and challenges in export of cotton yarn, Lahoti said that India is the largest exporter accounting for 26 per cent of the global share. “Our yarn quality is well-accepted. Yet, because of the export duty that Indian yarn attracts, we are losing our market share in China.”
India exported 603 million kg (mkg) of cotton yarn to China in 2013-14. This fell almost by half to 315 mkg in 2017-18. At the same time, Vietnam’s exports to China increased from 287 mkg in 2013-14 to 718 mkg in 2017-18. Currently Vietnam’s export is well over twice that of India’s export to China.
China is importing from India only to bridge the gap in demand from supplies from its domestic spinners.
Vietnam has no raw material base but imports from the US, India and China. It competes with Indian suppliers due to the advantage of zero tariff in most of the importing countries.
Texprocil and the Southern India Mills Association have taken up this tariff correction issue both at the Asia Pacific Trade Agreement (APTA) and RCEP (Regional Comprehensive Economic Partnership) forum, seeking some concession, Lahoti said. The problem is more severe in fabric than yarn.
Despite being the world’s largest exporter of cotton yarn, India’s share fell from 30 per cent in 2015 to 25 per cent in 2017. Vietnam is second with with a share of 19.94 per cent.
The ratio of yarn production to export slipped to 26 per cent in 2017-18 from 33 per cent in 2013-14 indicating a growth in domestic consumption. (Yarn production grew from 3,900 mkg in 2013-14 to 4,065 mkg in 2017-18). Though over 3 million spindles and 60,000 rotors were added to the spinning capacity in the last five years yarn production has stagnated at around 4100 mkg as 1.6 million spindles were scrapped and capacity is under utilised, he said.
The industry is showing an uptick as cotton yarn prices are tending to increase over the last two months mainly due to continuous increase in cotton prices from mid-February, he said.
It said the merged entity will follow a policy of non-exclusive licensing of non-selective herbicides or their active ingredient(s)
The merged Bayer-Monsanto entity in India will need to give non-exclusive licensing of its genetically modified (GM) and non-GM traits, currently commercialised in India or to be introduced in the near future on a fair, reasonable and non-discriminatory basis, the Competition Commission of India (CCI) has said.
Approving the merger of Bayer and Monsanto in India, the CCI released conditions attached with the approval.
It said the merged entity will follow a policy of non-exclusive licensing of non-selective herbicides or their active ingredient(s).
It will be in the case of launch of new GM or non-GM traits in India that restrict agricultural producers, including farmers, from using specific non-selective herbicide(s) being supplied only by the parties, on a fair, reasonable and non-discriminatory basis.
The merged entity will also grant access to Indian agro-climatic data, free of charge, to the central government and its institutions, to be used exclusively for public good, the CCI said.
The CCI order also said that the combined entity is also barred from offering its clients, farmers, distribution channels or its commercial partners, two or more products as a bundle as this may potentially have the effect of exclusion of any competitor.
The commission asked Bayer to divest its glufosinate ammonium (a non-selective herbicide), crop traits of cotton and corn, and hybrid seeds of its vegetables businesses.
It also ordered that Monsanto should divest shareholding in Maharashtra Hybrid Seed Company Limited (26 per cent) to an independent entity. Bayer is also supposed to honour these changes for seven years from culmination of the deal.
CCI’s approval of the $66 billion deal, proposed in September 2016, will make the merged entity the world’s largest seed and pesticide player.
Russia, China and European Union have already approved their merger.
EU has stipulated, among other conditions, Bayer will have to exit global field crop seeds businesses such as canola, cotton, and soybean, R&D platform for hybrid wheat, global vegetable seeds business, global glufosinate ammonium business as well as certain glyphosate-based herbicides business in Europe.
Russia’s Federal Anti-monopoly Service (FAS) has also given approval on the condition that Russia be provided modern technologies from Bayer and Monsanto.
Continuing his outreach programme of direct interaction with beneficiaries of his pet schemes, Modi spoke to farmers from over 600 districts via video-conferencing, highlighting the government interventions right from seeds to market that is aimed at addressing farm distress.
eaching out to farmers, Prime Minister Narendra Modi today showcased his government’s “unprecedented” work in the agriculture sector, including doubling of the budget to Rs 2.12 lakh crore.
Modi also reiterated that his government is working to double farm income by 2022.
Continuing his outreach programme of direct interaction with beneficiaries of his pet schemes, Modi spoke to farmers from over 600 districts via video-conferencing, highlighting the government interventions right from seeds to market that is aimed at addressing farm distress.
The government, through an extensive and balanced policy, is aiming to provide inputs like quality seeds, fertilisers, water and electricity as well as markets for increasing farmers’ income, he said.
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“We have decided to double farmers income by 2022… When I talked about doubling of farmers income, there were many people who made fun that this is not possible and difficult. They created an atmosphere of doom. But we decided as I had full faith in farmers,” Modi said.
To achieve this target, he said the four cornerstones of the government policy are cutting input cost, fair price for the crop, preventing post-harvest losses and creating alternate sources of income.
Modi said in the Budget for 2018-19 fiscal, the government announced that the minimum support price (MSP) for all crops will be fixed at least 1.5 times the cost of production. He also listed out all the costs that will be included while fixing the MSP.
“The budget allocation for the agriculture sector in 5 years of the previous government was Rs 1.21 lakh crore. This has been increased to Rs 2.12 lakh crore during 2014-19, which is almost double. This clearly reflects our commitment to farmers welfare,” Modi said.
Stating that there has been “unprecedented development” in the farm sector during the last four years, the Prime Minister highlighted that foodgrains production in the country touched an all-time high of 280 million tonnes during 2017-18 crop year as against an average production of 250 million tonnes during 2010-14.
There has also been bumper production of fruits, vegetables and milk, he said, adding that pulses production has increased by an average 10.5 per cent. Production of fish and milk grew by 26 per cent and 24 per cent, respectively. Egg output has risen by 25 per cent.
“Our effort is to provide farmers assistance at all stage of agriculture — at the time of sowing, after sowing and at the time of harvesting,” he said, adding the policy interventions are being planned to help farmers right from seeds to markets.
First, soil health cards are being provided to help farmers better understand soil nutrient status of his/her holding and advice them on the dosage of fertilisers.
Thereafter, loans are being made available to farmers to help them procure good quality seeds, he said, adding neem coating of urea has ensured that black-marketing of the crop nutrient is stopped and farmers get it without any problem.
To ensure farmers get the right price for their crops, Modi said an online platform e-NAM has been started to eliminate middlemen. As many as 22,000 rural markets are also being linked to wholesale mandis.
The government is also giving special attention to allied sectors like fisheries, dairy and bee-keeping to boost farmers income, he added.
The Prime Minister said farmers should get full credit for ensuring the country’s food security but rued that “from the beginning, farmers were left to fend for themselves” which resulted in their shrinking prosperity.
Modi highlighted the various initiatives launched by the government in the last four years such as soil health cards, new crop insurance scheme, irrigation programme and e-NAM, among others.
Under Prime Minister Krishi Sinchaee Yojna, Modi said about 100 projects are being completed so that water reaches all agriculture fields. The government is promoting drip irrigation to achieve “per drop more crop” and reduce input cost.
Modi said farmers can increase their income by value-addition of farm produce.
The Prime Minister highlighted that more than 500 farmer producers organisations have been established in the last four years which help farmers in getting more sales realisation with lower input costs. These FPOs have been exempted from income tax.
Talking about the new crop insurance scheme, Modi said farmers were not getting any claim under the previous scheme.
“We have reduced premium and scope of insurance has been widened,” he said, adding that this has helped in increasing the insurance coverage by 60-65 per cent.
Modi said the government has provided soil health cards to 12.5 crore farmers in the last four years, helping farmers to boost yields and cut input cost.
Interacting with farmers from the North-East, he said 21 lakh hectares have been brought under organic farming as against 7 lakh hectares in 2013-14.
