Cotton Corporation of India, the government agency that procures the crop at support prices, says the agriculture ministry’s estimate of cotton production is too negative and actual production will only be marginally lower compared to 2014. B K Mishra, Chairman and Managing Director, Cotton Corp says they expect an output of 35 million bales (of 170kg each) in 2015-16, marginally lower than last year’s 35.5 million bales. The first advance estimate by the ministry, pegs India’s cotton output at 33.5 million bales, which is the lowest in five years.

Data from the Agriculture Ministry shows that until now, cotton has been sown in 11.5 million hectares until now, compared with 12.6 million hectares sown in 2014. The June-September South-West monsoon recorded a deficit of 12 per cent till September 23, 2015 as per the India Meteorological Department. Rain-fed cotton growing areas in Telangana, Maharashtra and Andhra Pradesh experienced lower than normal rain.

Mishra added that though some crop was damaged due to a white fly pest attack in the northern states (Punjab), and the area under cotton has reduced in states such as Gujarat, the revival of the monsoon in the past few weeks is likely to help the crop in rain-fed areas. Procurement by government agencies such as Cotton Corp., however, may be lower this year because of higher prices of cottonseed and a possibility of exports to Vietnam and Bangladesh.

Physical procurement of cotton at support prices by a sort of ‘deficiency price payment’ system is being considered by the government mentioned Mishra. In this system, the difference between the market price and a predetermined threshold, which is a form of price insurance, would be paid to the farmers.