Over 2 lakh farmers in Maharashtra sit on piles of unsold cotton due to COVID-19 lockdown; stock worth Rs 5,500 crore yet to be procured
The farmers stuck in this quagmire, due to the COVID-19 lockdown, are mostly from Vidarbha, a huge cotton belt, and from districts like Parbhani, Aurangabad and Jalna in Marathwada. Being a labour intensive cash crop with an investment of Rs 25,000 per acre, the delay in procurement makes cotton farmers even more vulnerable.
The last five days have been chaotic for farmers in the small town of Pathri in Maharashtra's Parbhani district. Four hours, from 7 am to 11 am, see a deluge of farmers frantically lining up to sell their harvested cotton to the local traders.
Gajanan Ghumbare, a farmer with 10 acres of land where he grows cotton, says, "The procurement of cotton began last week for the first time since lockdown. 60 quintals of stock is lying in my farmland since the harvest in January. Farmers are panicking at the thought of being unable to sell their crop."
Among the several constituencies of people struggling due to the lockdown enforced in India since 25 March to contain the spread of COVID-19, cotton farmers in Maharashtra are not left behind. Much of the harvest, which begins at the end of November and goes on for two months after that, remains unsold even by the end of April.
Govind Wairale, former general manager of The Maharashtra State Cotton Growers' Marketing Federation Limited, a cooperative body involved in procurement of cotton, said about 25 percent of cotton in Maharashtra is just lying in farmlands, waiting to be sold, due to the lockdown.
“The expected production of cotton in Maharashtra was supposed to be 400 lakh quintals,” he said, “but about 100 lakh quintals are yet to be sold." If one goes by a liberal estimate of 50 quintals per farmer, it means 2 lakh farmers and their families are still waiting for their returns. The minimum support price (MSP) of cotton is Rs 5,500. In other words, stock worth Rs 5,500 crore is yet to be procured from farmers.
The farmers stuck in this quagmire are mostly from Vidarbha, a huge cotton belt, and from districts like Parbhani, Aurangabad and Jalna in Marathwada. Being a labour intensive cash crop with an investment of Rs 25,000 per acre, the delay in procurement makes cotton farmers even more vulnerable.
Under normal circumstances, the procurement concludes by the end of April. The past few years indicate there is a rise in the price of cotton in the first week of April due to international fluctuations. Farmers keep a bit of their harvest handy to benefit from that boom. It leaves enough time for them to invest in preparations of their land, which begin in May.
However, coronavirus has rendered all of these calculations useless. "The cropping season begins mid-June," said Ghumbare, "but we need money to buy seeds, fertilisers and pesticides. We need to plough the land ahead of the sowing. If we do not sell our cotton as soon as possible, the entire upcoming season would go down the drain."
The Cotton Corporation of India (CCI) is a government body, which works under the Union Textile Ministry and, is responsible for the procurement of cotton across India. After the MSP is decided, it acts as an implementing agency. The cotton federation of Maharashtra is a sort of its sub-agent. "The CCI’s working capacity is down to 20 percent of what it used to be due to the lockdown. At the rate with which they are going they will take another three months to conclude procuring," said Wairale, who is based in Nagpur.
But farmers cannot wait that long. After the procurement opened up in Parbhani, Ghumbare said that 35,000 farmers have registered to sell their harvest. “More than half of those farmers will sell it to a trader because of the waiting period," he said.
The traders have exploited the situation of the farmers during the lockdown. Ghumbare said they have been procuring cotton from farmers in Parbhani at only Rs 3,100 per quintal, even when the MSP stands at Rs 5,500. "In fact, we paid Rs 1,400 per quintal just to the labourers at the time of harvesting the crop. It is a big loss to the farmers, but many have resorted to panic selling at a throwaway price," he said, "the traders, however, are making windfall gain."
Wairale said the traders are not confident of selling it further to the factories. “The factories require 40-50 workers," he said, "and for the workers to practice social distancing and also to work, is a difficult task. Therefore, even the traders are not keen, and are playing it safe."
The moderate procurement because of coronavirus is likely to have a larger trickle-down impact across the hinterlands of Maharashtra. If the harvest goes well, they use the money from the season not just to buy inputs for the next farming season, but also to buy clothes, invest in two-wheelers and maybe invest in a television set. The money comes back in the market. The lack of procurement means a slowdown in the rural economy.
Last year, the same cotton was sold at Rs 6,250 per quintal, said Ganesh Nanote, a farmer in Vidarbha’s Akola district. "The government should urgently do something to streamline the procurement process during lockdown," Nanote said,"otherwise, we will have to borrow money for the upcoming season. I already have a crop loan of Rs 2.5 lakh. I am hoping to repay that by selling the 100 quintals of cotton I have in my farmland."
Agriculture Minister of Maharashtra Dada Bhuse said that he spoke to the union ministry ten days ago and made it clear that all the cotton should be procured irrespective of its grade. "We need more CCI procurement centres, and I have already made that demand," he told Firstpost.
The pressure on government agencies to procure cotton had not been as great in the last season as the difference between the MSP and traders’ price was not much. The farmers, therefore, sold their harvest to the trader quite happily. This season, though, with the lockdown, the traders are procuring at anywhere between Rs 3,000-4,000 per quintal, which is a huge drop from the MSP of Rs 5,500. Farmers, therefore, are keener to sell to the government agencies as much as possible.
However, even among the farmers who have sold their harvest to CCI, some of them have not received their payments. Totabai Rathod, 65-year-old farmer from Yavatmal, sold 32 quintals of cotton on 10 March. She was supposed to get Rs 1.75 lakh. But she has not received a penny even after over a month and a half.
Bhuse said he was unaware of such cases, but assured that he will inquire into pending payments.
Nagpur-based farm activist Vijay Javandiya said the recession in the international market is also one of the reasons behind the declining cotton prices. “The situation was not great before coronavirus either. But it has worsened further with coronavirus,” he said, "because of the dwindling price of cotton (lint) in the international market, the traders here are not buying it for more than Rs 4,000 per quintal."
Javandiya said the price of cotton had shot up last year because of drought, which meant inadequate fodder. “Cottonseed is used as fodder for livestock. The demand soared, and the seed was sold for Rs. 3500 a quintal. That increased the price of cotton as well. This year, cottonseed costs only 1700 per quintal. We are in the middle of a serious crisis," he said, "and the state must procure quickly from the farmers at MSP. The government can bear a bit of loss. Farmers cannot."
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