With units operating at 20-30 per cent of their installed capacity with the shortage of cash hurting operations, Demonetisation has thrown the ginning industry out of gear. Ginning clusters in north Gujarat and Saurashtra have expressed concerns over the prolonged slackness in ginning activity due to shortage of cash at banks in the smaller towns and limited penetration of banking among the workers, mainly in Saurashtra that houses nearly 600 ginning units.
Since November 8, the ginning activity has been low as arrivals have also dried. Now that the arrivals have improved, processing has remained low due to shortage of liquidity in the market. Cotton arrivals in the market is reported at about 20,500 bales (of 170 kg each) at Rajkot with prices quoting in the range of 980-1,067 per maund of 20 kg. The arrivals are almost at par with what was witnessed in the same period last year.
According to factory owners, the farmers have started accepting cheques but the operational issues such as clearing time for a nationalised bank cheque into a cooperative bank takes longer time, thereby hurting farmers preference to use the instrument for the transaction. Avers Anand Popat of Saurashtra Ginners Association that the banks should either issue instruments such as bankers cheque or travellers cheque without additional cost so that money transfer becomes quick and easy. Ginners are clueless what will happen after December 30. Hence they are maintaining a wait-and-watch approach. Trade sources maintained that raw cotton prices have touched 5,000 a quintal, while processed cotton prices hover at around 38,200-900 a candy (of 356 kg each).