Cotton Association of India: Speech By Shri Atul S. Ganatra

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Cotton Association of India: Speech By Shri Atul S. Ganatra

Speech by Shri Atul S. Ganatra President CAI

Speech by Shri Atul S. Ganatra President at the 98th Annual General Meeting held on Tuesday, the 29th December 2020 in Mumbai.

Distinguished Members and Friends,
It gives me immense pleasure to welcome each one of you to the 98th Annual General
Meeting of the Association. The Directors’ Report and the Annual Accounts giving a brief
summary of the activities and the working results of the Association for the year ended 31st March 2020 have already been circulated to you all well in advance. With your kind
permission, I take them as read.

Before I proceed to deal with the agenda of the Annual General Meeting, it is customary of
the Presidents of this august body to address the members. In keeping with this tradition, I
would like to take this opportunity to share some of my thoughts on the cotton scenario of the country.

DISASTROUS IMPACTS OF COVID-19 PANDEMIC ON THE COUNTRY
The COVID-19 pandemic has proved to be the biggest setback to the economies the world
over. This pandemic has not only endangered the health of the citizen and disrupted their
normal lives but also brought their economies to a grinding halt.

Every country of the world is fighting the pandemic in its own way and acclimatising with the new normal norms to live with the impediments and disruptions caused on account of the lockdown imposed to contain further spread of this pandemic.

In India, lockdown was imposed in March 2020. The scale of India’s restrictions brought the country of 1.3 billion people to a sudden halt and caused the economy to take a staggering hit. The country’s Gross Domestic Product (GDP) in April – June 2020 quarter shrank by 23.9%. India became the most affected major economy due to COVID-19.

However, the silver lining is that India emerged as one of the top three destinations for FDI. Its current account surplus climbed to a record US $ 20 billion. With its double digit growth in exports to China, India’s trade deficit with China has nearly halved the trade gap between the two partners in the first five months (April-August) of the current fiscal.

DOMESTIC COTTON SCENARIO
The lockdown also had a major impact on the Indian cotton sector. Before COVID-19 crisis, this sector was expected to grow steadily. However, the far-reacting impacts of novel corona virus severely impacted our cotton business and had a disastrous effect on every link in the cotton and textile value chain.

Although production of cotton in India during the 2019-20 crop year was higher by over 15% to 360 lakh bales from 312 lakh bales produced in the country during 2018-19, demand was drastically reduced by about 19.75% to 250 lakh bales in the 2019-20 crop year from 311.50 lakh bales consumed in 2018-19.

International trade from India also suffered due to the pandemic and the country could export only 50 lakh bales cotton during 2019- 20 which was much less than the quantity it was expected to ship. Cotton imports to India during 2019-20 were merely 15.50 lakh bales against 32 lakh bales imported in the previous cotton season.

WEAK PRICE TREND AND MSP OPERATIONS
Slack demand weakened the cotton prices, which fell by about 15% during the 2019-20 crop year compared to the previous cotton season. The Cotton Corporation of India (CCI) and other Government agencies had to intervene and the country went through a massive support price operation. CCI had purchased 115 lakh bales during the 2019-20 crop year.

During the ongoing 2020-21 crop year also, the country is likely to go through a massive support price operation and if a recent statement given by Shri P.K. Agarwal, CMD, CCI to the Press is any indication to go by, CCI is ready to procure around 100 lakh bales during 2020-21. In fact, CCI has already procured over 48 lakh bales valued at Rs.13, 939 crore up to 12th December 2020.

As you all are aware, during the last three years, the Government has increased the MSP of GUJ ICS105 29mm (trade name Shankar-6) cotton by over 33% (about 26.5% in 2018-19, 1.9% in 2019-20 and 5% in 2020-21).

MSP is important to provide price support to farmers to prevent them from distress sales in the event of severely low prices. However, the burden on the Government exchequer can be minimised by incentivising exports of cotton from India, which will eventually enable farmers to realise competitive prices for their produce like their counterparts in other countries like USA, Australia, Brazil, etc. Indian cotton is the cheapest cotton in the world and hence, there is a tremendous scope of improving export performance of the country.

INTERNATIONAL COTTON SCENARIO
In its latest report, International Cotton Advisory Committee (ICAC) has estimated the world cotton production for 2019-20 season at 26.05 million tonnes, while the consumption of cotton for the said season is estimated to be 22.54 million tonnes. The world carry-over stock at the end of the 2019-20 crop year is estimated at 21.24 million tonnes. The world carry-over stock at the end of 2020-21 crop year is also estimated by the ICAC to be relatively higher at 21.65 million tonnes.

COTTON PRODUCTIVITY IN INDIA STILL AMONG THE LOWEST IN THE WORLD

India is ranked number 1 in the world insofar as the production of cotton is concerned. It also has the largest acreage under cotton. However, its cotton yield is always low, which is a concern. Due to the intense efforts of all concerned including research institutions and the policy support from the Government, India has witnessed a marked improvement in cotton productivity also. However, it is stagnating at around 500 kgs. per hectare for many years compared to the world average productivity mark of over 700 kgs. per hectare.

To achieve the world cotton average productivity mark, India needs to strategise its moves and lay greater emphasis on the large scale implementation of technological advancements and better management practices in the field of cotton cultivation.

CAI ENTERED 100TH YEAR
As notified previously, our Association has completed 99 years of its glorious services to the cotton trade. In our onward journey, we have received unstinted support and cooperation from our members and I am indeed grateful to each one of you. CAI has now entered its 100th year and I pay a rich tribute and complements to all our members on this landmark achievement.

IMPROVEMENT IN SERVICES OF CAI
Since its de-regulation from the purview of the Securities Contracts (Regulation) Act, 1956 a few years ago, the focus of the CAI has changed from regulation of the cotton trade to rendering services.

During 2019-20, CAI has taken concrete steps in this direction by getting all its activities including cotton testing facilities at Mumbai, Rajkot, Aurangabad, Warangal, Adilabad and Yavatmal ISO 9001:2015 certified.

The CAI’s cotton testing facility in Mumbai is also NABL accredited and the NABL accreditation of its Rajkot laboratory is in the pipeline and nearing completion. The process of ISO certification of the remaining laboratories at Hubli, Bathinda, Ahmedabad, Khargone, Adoni and Jalgaon will commence soon after the proposal concerning the same is approved by the CAI Board.

Recently, Mumbai, Rajkot and Ahmedabad laboratories have been upgraded by installing additional new HVI and auto-trash separator machines.

CAI can rightfully lay claim to two very important and distinctive functions. One is that it maintains grade standards and the other is that it maintains spot rates of all major descriptions of Indian cottons. Both these functions are crucial in providing guidance to the trade and industry in their day-to-day cotton business.

We have recently revised the Schedule of Standard Descriptions of Indian Cottons to make the same relevant to the present quality and business practices.

We have also made certain changes in the guidelines for fixing value differences, which will provide better indication of price trend and help traders to understand the market better. We are in the process of finalising a comprehensive plan to upgrade our grade standard boxes periodically. There are several such measures which are under consideration to further improve the prevailing trading practices.

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