iGrain India - In Gujarat, traders are raising concerns over the high Minimum Support Price (MSP) of cotton, which has been set by the Central Government at Rs 7121 per quintal for medium fiber and Rs 7521 per quintal for long fiber varieties in the 2024-25 marketing season.
Gujarat, being the largest cotton-producing state, plays a significant role in the cotton market. The traders and associations believe that if the MSP remains at this elevated level, it could lead to a slowdown in cotton trade, affecting the cotton textile industry, which might face difficulties in boosting its activities.
The secretary of the Gujkot Trade Association has suggested that rather than maintaining high MSPs, the government should focus on enhancing the free market mechanism for cotton.
One proposed solution is to provide greater subsidies to farmers, ensuring they get attractive and profitable prices for their cotton.
However, they also stress the importance of supporting the industry and trade sector to facilitate better cotton trading.
Under the current system, the government uses MSP to purchase cotton directly from farmers, but it does not consume the cotton itself.
Instead, it sells it back in the market, which traders claim raises prices unnecessarily. Instead of this approach, they propose that if the industry and trade sector could buy cotton at a lower price, the government could compensate farmers for the price difference under the Bhavantar Bhugtan Yojana.
This model would potentially reduce the cost of textile products, making them more competitive, and could lead to increased exports of cotton, benefiting both farmers and the industry.