Cotton ginning units in India are suffering on the back of falling cotton prices, low margins and loans at high costs. As per the data, cotton prices continued to witness a decline from Rs 32,800 to Rs 32,000 per candy (356 kg) during the month of November.
According to Arvind Patel, Vice-President of Saurashtra Ginners’ Association (SGA), cotton ginners are facing tough times with declining export demand from leading buyers like China, which is also affecting their profit margins. Out of almost over 4,300 ginning units, about 1,300 are spread across Gujarat’s Saurashtra and North Gujarat and other regions. But some of them are now planning to shift to other business then cotton ginning due to low demand.
As per industry estimates, it requires about 1,000 kg of raw cotton to make one candy (356 kg) of cotton. The cost economics puts the total cost to make a candy at Rs 42,000-43,000, including processing cost, while the price stands at Rs 32,000 per candy. Raw cotton comprises of about 34 per cent of cotton, 63 per cent of cotton seed and about three per cent wastage. Seed fetches anywhere between Rs 390-410 per 20 kg, which leads a cotton ginner having to spend around Rs 44,000 per candy, including cotton and seed resulting in very low profit margin.
Now industry bodies such as Punjab Cotton Ginners’ Association have decided to approach the Union Finance Minister and the Reserve Bank of India (RBI), seeking financial support for the sector.
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