Bt crops can help tame cotton prices

December 2, 2014 | 0
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A recent Credit Analysis & Research Limited (CARE) report – ‘Staring At A Supply Glut: Challenging Times Ahead For The Indian Cotton Sector’ – says that cotton prices in India are falling. This is due to a record harvest based on increased area under cultivation, and lower domestic and Chinese demand. China is the largest buyer of Indian cotton.

As these factors persist, it is likely that cotton prices will fall even further over the next few months.

Already, says the report, prices have fallen below the minimum support price (MSP) – the rate at which the government buys crops from farmers to ensure that they don’t post losses – of Rs 35,000 per candy (356 kg). A revival of export demand is unlikely and you can expect a consequent impact on domestic yarn prices too.

The record crop has already forced the government to buy cotton at MSP, perhaps ultimately procuring 8 million to 10 million bales compared to the 40,000 it purchased last season. Also, India will probably have to look at markets other than China – such as Bangladesh, Vietnam and Pakistan – for exports.

How can India ensure that cotton cultivation – on which crores of people are dependent – remains viable? The answer lies in cutting the cost of cultivation through technology.

The adoption of Bt cotton technology has been telling. It has helped create more than Rs 30,000 crore in additional value for 60 lakh farmers by reducing insecticide use (lowering costs) and boosting yields (raising income).

Farmers who adopted Bt Cotton reaped the economic benefits of defeating pests even as they reduced insecticide use. These, combined with higher yields, elevated farmers’ standard of living – enabling them to purchase automobiles, build better houses and give their children a better education. They also invested in life insurance and farm equipment.

In addition, the benefits of Bt cotton technology have boosted rural transport and trading. Income gains for farmers have raised consumption of food and non-food items, growing rural economies. What’s more, according to the International Service for the Acquisition of Agri-biotech Applications (ISAAA), income distribution showed a healthy trend – 60% of the gains went to the extremely and moderately poor.

According to the CARE report, India’s cotton production grew from 14 million bales (170 kg each) in 2000-01 to 37.5 million bales in 2013-14. Area under cotton cultivation increased from 85.76 lakh hectares in 2000-01 to 115.53 lakh hectares in 2013-14, while yield grew from 278 kg per hectare to 518 kg per hectare.

One of the major socio-economic benefits was the upliftment of women. The ISAAA report ‘Socio-Economic and Farm Level Impact of Bt Cotton in India, 2002 to 2010’ said Bt cotton resulted in the generation of substantial employment, especially for women. It said that women earned more from Bt cotton than males. This was because harvesting was usually done by female labourers, whereas the men took on pest control duties. Since pest control work reduced due to Bt technology and harvests increased, women labourers got more employment and income. The men, meanwhile, also tended to other agricultural and non-agricultural activities, resulting in even more income for the families.

The Indian textile industry is highly dependent on cotton. There have been massive investments in the sector in the last five years with the cotton textile segment getting the lion’s share. India is currently the largest exporter of cotton yarn and GM cotton has played a significant role in this achievement.

Cotton prices are dependent on too many uncontrollable variables, such as local and export demand. However, what can be controlled is farm input costs and efficiency. This would also have a positive impact on allied industries, such as ginning and textiles.

For this, faster and wider adoption of Bt technology is critical. Monsanto is proud to have played a role in this.

 

 

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