Per segona vegada en dos anys, India halted exports of cotton because of fears that higher raw cotton prices would hurt the domestic cotton processing industry. India is currently the second largest exporter of cotton. Actions by the Indian government in recent days have added to the confusion and it must development a better flow of market information and political decision making.
Exporting quantities of cotton that impact international markets is a new experience for India. Segons les estimacions de servei agrícoles estrangers (FAS) d'USDA, per a la 25 years prior to the 2005/06 marketing year in only three years did India export more than 1 milions 480 pound bales of cotton. In five years clustered in the early 2000s, India imported more than 1 million bales each year. India’s cotton yield per acre harvested began to increase sharply with the use of hybrid cotton seed and biotech seed resistant to insect pests. Per a 2003/04 a través de 2011/12 marketing years cotton yields averaged about 500 quilos per hectàrea, després d'una mitjana 300 quilos per hectàrea en 1993/94-2002/03 i 250 pounds in the prior 10 anys.
The higher yields and profitability pushed annual cotton acres harvested from 8-9 milions 10 years ago to 12.2 milions per a la 2011/12 any de comercialització. Production has more than doubled from 11-12 million bales annually to 27.0 milions de bales de 2011/12. Domestic consumption has increased from 13.5 milions bales l'any 10 years ago to 19.8 milions de bales de 2009/10, 21.1 milions de bales de 2010/11 i 19.5 million bales this year. Almost all the textiles produced are used in the domestic market of 1.2 mil milions de persones. Textiles producers are major employers and recently profits have been marginal or negative.
Cotton has been traded throughout the world for decades, but now has a relatively small number of major exporting and importing countries. L'u. exportar 14.4 million bales last year and is projected at 11.0 million bales this year. Segons FAS, India is next at 5.1 milions bales l'any passat i 7.8 million bales this year. Australia had exports of 2.5 milions bales l'any passat i 4.0 million bales are projected this year as it recovers from smaller crops caused by low irrigation water supplies. Brazil is also expanding exports moving from 2.0 million bales last year to 3.9 million bales this year. The next three largest exporters projected for this year are Uzbekistan at 2.6 milions de bales, Greece at 1.0 million bales and Turkmenistan at 850,000 bales. India cannot limit exports without having serious market impacts.
The import side of the global market is dominated by China with imports of 12.0 million bales last year and projected to increase to 18.5 million bales this year, 47.7 per cent del comerç total. Much of the additional cotton imports will be placed in reserve stocks. Traders estimate that 70 percent of Indian exports regularly go to China, while some Indian officials believe 85 percent of current exports are going to China. The next largest importer is projected to be Bangladesh at 3.3 million bales followed by Turkey at 2.5 million bales and Indonesia at 2.0 milions de bales.
World cotton stocks at the end of the marketing year on July 31, 2012 are projected by FAS at 62.3 milions de bales, fins a 60.8 milions bales l'any passat i 47.3 milions de bales al final de la 2009/10 any de comercialització. China is expected to hold stocks of 20.1 milions de bales, 32.3 per cent del total mundial, i fins de 18.1 milions bales l'any passat i 11.6 million bales two years ago. India’s stocks are expected to be 7.9 milions de bales, per sota de 9.3 milions bales l'any passat, però cap amunt de 7.6 million bales the previous year. Textile producers suggest a need to have 2.5 months of raw cotton, sobre 4.2 milions de bales, at the start of the marketing year.
Communications within the Indian government has been a problem. The Agriculture Minister Sharad Pawar said he had no knowledge of the Directorate General of Foreign Trade under the Commerce Ministry considering a decision on exports and when announced, he immediately raised the issue with Prime Minister Mammohan Singh. Textiles Minister Kiran Dhingra said exports of 7.3 milions de bales (480 bales de lliura), 700,000 more than previous expectations of 6.6 milions de bales, would pull carryover to 2.8 million bales when the official government target is 3.9 milions de bales. Traders had registered shipments of 9.4 milions de bales.
The ban forced prices higher on the U.S. futures market the allowed daily limit of $0.04 per lliura, but prices have since retreated. Indian farmers complained of falling prices as buyers withdrew bids in expectation of still lower prices. D'acord amb l'u. Agrícola agregat a l'Índia, about one-third of this year’s harvest remained in farmer’s hands when the export halt was announced. If market prices fall below government support prices, the government-run Cotton Corporation of India will buy cotton to support farm prices, which have fallen 40 percent in the past year in anticipation of larger production after record high prices last year. Lower farm prices could result in less cotton planting next year.
Trade Minister Anand Sharma appeared to completely reverse the ban, but then Trade Secretary Rahul Khullar said new export registrations won’t be accepted until the government completed a review of recent exports and applications, which should take about ten days. A panel headed by Finance Minister Pranab Mukherjee will meet in two weeks to discuss the export situation. Sobre 2.8 million bales registered for export, but unshipped, appear to hang in the balance.
Concerns about exports to China are at the center of the current controversies, but the larger issues are how Indian cotton export data are released to the public and participants in trade and how the government makes decisions on trade policy. Private market participants, particularly international traders, have previously complained about the inability to discern supply availability. The confusion of the last ten days shows that all parts of the supply chain, especialment els agricultors, are not included in the internal government fact and opinion gathering that should be part of a decision on halting exports.
The correct policy is to allow cotton exports to continue with no government bans on shipments. For that to be a viable policy option, market participants (in country and internationally), government decision makers and other interested groups must have access to accurate data on the supply situation in the country. This is not an insolvable problem. L'u. and other developed countries have worked on this issue for more than 50 anys. India is simply too important to global cotton trade for the current confusion to be allowed to continue.
Ross Korves és un analista de política econòmica de veritat sobre comerç i tecnologia