Procurement of Kapas

As a premier organisation in Public Sector and engaged in marketing of cotton, CCI acts as a role model in the procurement of kapas (seed cotton) through auction conducted by the APMCs, in the notified market yards. CCI officials attend these auctions regularly from day one of the arrivals and remain present throughout the season till viable arrivals last in the markets. Regular presence as well as regular purchases by CCI in these markets, help in creating a competitive environment to the advantage of cotton farmers in realizing price in commensurate with quality of their kapas produce. All kapas quantities are purchased in the auction and in competition with private buyers/traders and mills under close supervision of APMC Officials. Over the years, with PAN India presence through 350 procurement centres in all the major cotton growing regions, CCI has become a friend to cotton farmers and “One Stop Shop” for good quality Indian cotton for textile mills. All these purchases are made either under Minimum Support Price operations or under commercial operations.

 

Price Support Operations

For every crop year, Government of India fixes a Minimum Support Prices (MSP) for the basic two varieties viz. J-34 (Rajasthan) and H-4. The MSP for other varieties are then fixed by the Office of the Textile Commissioner, Mumbai, depending upon quality differentials and market differentials of different varieties from the two basic varieties. As and when kapas prices of any variety touch the level of MSP, CCI as a Nodal Agency of Government of India, resorts to immediate market intervention and makes purchases of kapas at MSP without any quantitative limits. The MSPs of different varieties are fixed for FAQ grade kapas stipulating minimum quality parameters on staple length and mic value. Since total kapas arrivals in the market yards, do not match the prescribed parameters of FAQ grade, Corporation allows purchases of below FAQ grade kapas also by offering prices in commensurate with quality and within the MSP of the variety concerned. This helps the cotton farmers in selling their kapas produce under MSP operations and avoid distress sales. Corporation keeps itself ever ready to meet the eventualities of support price operations in all the cotton growing States. Depending upon the intensity of these operations, Corporation creates required infrastructure in the form of regular procurement centres as well as satellite centres so that farmers are not compelled to travel long distances for selling their kapas produce. Processing of kapas through satellite centers, is arranged by CCI at the nearest processing points.

Every year, before commencement of the Cotton Season (Oct. to Sept.), Govt. of India fixes the Minimum Support Price (MSP) of seed cotton (kapas) with a view to safeguard the economic interest of cotton farmers in case the kapas prices fall below the MSP level.

CCI as a nodal agency of Government of India, undertakes Minimum Support Price (MSP) operations strictly as per guidelines issued by Government of India, in the event prices of Fair Average Quality (FAQ) grade kapas fall below the MSP level.

The MSPs of different varieties are fixed for FAQ grade kapas stipulating minimum quality parameters on staple length and mic value. Since total kapas arrivals in the market yards, do not match the prescribed parameters of FAQ grade, Corporation allows purchases of below FAQ grade kapas also by offering prices in commensurate with quality and within the MSP of the variety concerned. This helps the cotton farmers in selling their kapas produce under MSP operations and avoid distress sales. Corporation keeps itself ever ready to meet the eventualities of support price operations in all the cotton growing States. Depending upon the intensity of these operations, Corporation creates required infrastructure in the form of regular procurement centres as well as satellite centres so that farmers are not compelled to travel long distances for selling their kapas produce. Processing of kapas through satellite centers, is arranged by CCI at the nearest processing points.

Procurement of kapas through the MSP mechanism has benefited the cotton farmers of the country, in a big way through assured price for their kapas produce as well as timely payments and it has helped in retaining their interest in cotton cultivation.

The steps involved in procurement of kapas from farmers in APMC are as under:

  • Farmers bring their kapas to nearest APMC yards for selling the same.
  • Kapas is sold by way of Open Auction/e-NAM in APMC yards.
  • Proper identification of farmers is being made by APMC Officials on the basis of their land records, aadhar cards, bank details etc. In this regard, State Govt. of Telangana has introduced bard-coded ID’s to farmers and State Govt. of Andhra Pradesh has developed web portal for identification of farmers.
  • CCI Officials remains in the market from the beginning of cotton season till end and keep close watch on prevailing market situation so as to protect the interest of cotton farmers.
  • In the event prices of Fair Average Quality (FAQ) grade kapas fall below the MSP level, CCI procures the entire quantity of FAQ grade kapas offered to it by Farmers in APMC at MSP.
  • Before procurement of cotton under MSP, proper quality assessment for FAQ grade parameters (i.e. Moisture content, Staple Length & Micronaire) are ensured and proper deductions are made towards below FAQ parameters as per MSP guidelines.
  • To ensure quality based remunerative prices to the cotton farmers, CCI started instrument based quality evaluation system for assessing of quality of kapas by using portable moisture meters and micronnaire testers.
  • After auction bidding slip is generated and weighment of kapas is conducted in presence of farmers, APMC officials and CCI Officials.
  • APMC provide the duly authenticated Takpattis (with digital signature)/purchase bill and banking details of the farmers to CCI.
  • Payment to cotton farmers are made 100% through online directly in farmers’ bank account in a period of 2-3 days after receipt of purchase bill along with details of farmers from APMCs.

 

Commercial Operations

In the absence of MSP operations, CCI undertakes viable commercial operations entirely at its own risk, for supply of cotton to mills in the domestic market. The purchases of kapas under commercial operations are also made through auctions conducted by the APMCs in the notified market yards. These commercial operations are basically dovetailed to indents and expected immediate demand from the mills under institutional sector as well as private sector. The main aim of these operations is to meet at least the annual cost of the minimum infrastructure maintained by the Corporation for Price Support operations. Here again, CCI Officials operate in the market in competition with other buyers including private trade and mills, by paying competitive prices for purchases of kapas from the cotton growers. For the benefit of the cotton growers, CCI makes purchases at an accelerated pace when market rules easy and slows down when prices are higher, so as to bring about necessary stability and give a desired direction to the ruling market prices. The prices paid by CCI are not only higher than the support prices but very much at par with the highest prices ruling in the market. In addition to this, purchases are made simultaneously for all grades of kapas so that cotton farmers can sell their produce without any difficulty and realize the sale price in commensurate with the quality of their produce. Even though the commercial operations are undertaken depending upon its commercial viability, still it helps the interest of the cotton growers through stabilization of kapas prices.

Details of State-wise Commercial Operations

 

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