By Nayan Dave
Due to the limited availability of cotton, majority of ginning and pressing mills across India have halted operations till fresh cotton crop arrives in the market in October this year.
Of the nearly 3,500 ginning and pressing units across the country, hardly 5-7% are operational as cotton prices are extremely high in domestic market, says Atul Ganatra, president of Cotton Association of India (CAI).
“Prices of cotton are artificially high in Indian market due to speculative activities. In the last one week, price of December futures has gone down from 123 cent to 112 cent (Rs 68,000 per candy) at US based Intercontinental Exchange (ICE). Despite this global trend, prices of cotton in India are ranging around Rs 98,000 to Rs 100,000 per candy (356 kg per candy). As a result, operation of ginning and pressing mills have become completely unviable,” Ganatra said.
Generally, ginners sell their end products to spinners. But spinning mills’ consumption has drastically reduced by 30-35% from as high as 2.9 million bales (170 kg per bale) to 2.2 million bales monthly, says Ganatra. Due to high prices of raw-material, demand from spinners would continue to reduce day by day, he claimed.
The owner of a ginning and pressing mill in Gujarat said that farmers don’t have raw cotton to sell and those traders who have accumulated cotton stock in their warehouses are not willing to sell at lower prices. Of the total ginning and pressing mills in the country, nearly 650 are situated in Gujarat. Nearly 500 mills are in Maharashtra while Andhra Pradesh and Telangana together have around 400 mills. Haryana, Punjab and Rajasthan have 350 odd mills. In Karnataka and Tamil Nadu, there are 250 and 125 mills respectively.
Arvind Patel, secretary of Saurashtra Ginners Association says that hardly 20-25 ginning mills in Gujarat are operational and these mills would also close down by the first week of July due to scarcity of raw material and higher input prices.
According to Gujarat State Co-Operative Cotton Federation (GUJCOT), from October 2021 to May 2022 nearly 7.35 million bales of cotton was processed in ginning and pressing mills of Gujarat compared to 8.82 million bales last season in the same period.
Interestingly, in last month hardly 350,000 bales of cotton processed in Gujarat compared to 1.36 million bales in May 2021. “Ginning units do small value addition in the entire textile chain. Hence, they work for a small margin. But higher cotton prices have further squeezed their margins. Now they will have to wait for fresh cotton harvest to hit the market,” opines Mahavir Jain, director (Textile), India Ratings & Research (Ind-Ra).