Government to pay Rs719 crore to CCI for cotton procurement losses

The government will reimburse Rs719.41 crore to the Cotton Corporation of India (CCI) for losses incurred while procurements at the minimum support price (MSP) during the 2012-13 cotton season.

The cabinet committee on economic affairs on Thursday approved reimbursement of  Rs719.41 crore to the CCI to cover losses suffered during minimum support price (MSP) operations in the cotton season of 2012-13.

The government, under the price support system (PSS) for the cotton season 2012-13 fixed the MSP for long staple (LS) and medium staple (MS) varieties of raw cotton at Rs3,900 per quintal and Rs3,600 per quintal, respectively. This led to increases of 29 per cent and 18 per cent, respectively, in the MSP of cotton for the year.

Cotton prices in Andhra Pradesh touched MSP prices in October 2012 and procurement under MSP operations commenced in the districts of Warangal, Guntur and Adilabad.

The CCI procured 2.27 million bales of seed kapas under price stabilisation operations from October 2012 to February 2013 at a total cost of Rs5,807.95 crore.

The CCI has successfully stabilised prices in Andhra Pradesh and avoided farmer distress with timely payments. Cotton prices in Andhra Pradesh had since crossed the MSP in March 2013, an official release noted.

CCI would be start conducting domestic and export sales on the bases of a decision to be taken by an inter ministerial committee consisting of representatives of the ministries of agriculture, commerce, textiles and the department of revenue, so as to strike an appropriate balance between interests of domestic users and producers, the release added.