Cotton statistics: Confusing or Syndication?
Statistics in relation to cotton sector are generated at various levels. One can be under a assumption that this is done properly, rationally and in an acceptable manner. However, this does not seem to be the case. Statistics vary according to the sources. Private sector, through associations and confederations, provide their own data, interpret government data, or use published data to further their arguments. However, it is common knowledge that the information provided by ginning, spinning and weaving mills is not often reliable. In fact, there is no absolute figure on the number of textile mills in India. Same is the case with cotton production, ginning, spinning and weaving. Cotton acres are normally calculated based on the cotton seed sales - a common practice for all crops. Agricultural departments do get information on seed sales from the dealers and companies, which is divided as per the standards of seeds used per acre. However, these are not reliable source of information, since there is a perspicacity to evade different taxes. Also, farmers do not adhere to the standards of sowing (so much seed per acre), because of poor quality seeds. They might buy more. Yet, this is one source of information relied upon every year and the other source is the past year statistics, which had come through the same process. Thus, over years, cotton statistics is a mix of facts, assumptions, estimations and manipulations. Even though, village-level information collection system does exist in India, which is consolidated at upper levels, this not done regularly and authentically, for many reasons.
Cotton seed companies have been using these 'unreliable' statistics to create anxiety among the farmers and 'cash' on a panic created for seeds. They use media, officials, scientists and politicians effectively, every year, in realizing their 'profit' goals. In recent years, they became brazen. They do threaten and blackmail State governments, because cotton seed is no longer covered by Essential Commodities legislation. Even though the governments are armed with various other legislations, they hesitate to 'bite the bullet', but do not hesitate to 'fire the bullet' on, if any, farmers agitations. Seed production, supply and distribution has become a matter of speculation, and is no longer a planned activity. No doubt, seed companies get away with immoral, anti-social and illegal acts and omissions.
Cotton production figures, at various levels, is also a big wonderful phenomena. In most mandies, cotton trading happens on 'cash and carry' basis, with very minimum level of documentation. Whenever a state agency such as Cotton Corporation of India enters the markets, there is an opportunity for estimations, sampling and calculations. But state interventions are wider, intermittent, far and few - most often done in a corrupt procedure. The additions upto the national level are based upon such 'dubious' state of affairs, at the mandie level. At worst, cotton production figures are estimates, and at best, they are still estimations. The error from the 'real' fact maybe more than 50 percent. But, then, arriving at production statistics is a very difficult task considering that there are more than 50 lakh cotton farmers, 110 lakh acres and maybe more than 200 mandies. But this does not deter the Ministry of Agriculture from giving us a absolute figure of cotton production.
From the mandies, cotton goes to ginning mills, for ginning and baling. Assuming that this where the Ministry of Textiles gets its estimations on cotton, one would straight-away go to the question, how many ginning mills are there in India? What is their capacity? What is their capacity utilization? With these basics, and the cotton arrivals and departures from ginning mills, a fairly reliable estimate of cotton production should be available. However, it does not happen in such a linear, transparent way. The number of ginning mills and their capacity or ability is also a matter of estimation. Often, the work done at a particular ginning mill is not completely documented - sometimes, wholly not documented.
Same goes with the other level, from ginning to spinning. The issue becomes a little more complex with spinning, as the cotton yarn comes out in many forms, blended and pure, and in many counts. With Hank Yarn Obligation (HYO - an obligation to supply 40% of production in hank form, to be used by handloom sector), and the determination of the spinning mills to steer away from HYO road-block, in connivance with the governments' reluctance to enforce it, production of cotton yarn is also a estimate.
Ministry of Commerce is dependent on statistics arrived from export quantities (of previous years), current applications for export and estimates from Ministry of Textiles and Agriculture. Thus, the three major Ministries have different sources and levels of estimations. With private sector lobbying and trading, these statistics can go awry anytime. There are different estimations at different periods by different Ministries and departments. The variation between these estimates is often 1 to 30 percent.
Given this state of affairs, it would be prudent to give a serious look at the estimations of cotton production beyond 310 lakh bales in 2010-11. Earlier estimates were pegged at 325 lakh bales (when the cotton was still with the farmers), and gradually the estimates were scaled down. Presently, it is 312 lakh bales. Not only this, additionally, other factors as delineated would also put a serious observer in a state of doubt.
Interestingly, cotton seed oil mills are reportedly facing shortage in supply of cotton seeds. According to them, normally, they would continue to get seeds from December onwards. However, this May, 2011, the seed supply started getting constrained. Their opinion is that farmers have retained cotton stocks with them, and thus it was not ginned. Without ginning, cotton seed does not reach the oil mills. If it is true, government has already finalized this year cotton production at 312 lakh bales. Does this figure include the cotton retained by the farmers, as claimed by cotton seed oil mills is a question that needs to be answered.
In this scenario, what is the actual position of cotton production? Is it increasing or decreasing? Do we need to know the most authentic figure of cotton production? Who benefits or loses from authenticity or falsity of cotton statistics?
Cotton farmers are losing in the bargain, whether it is bumper crop or no crop. It is time we addressed this situation. Otherwise, speculations and assumptions will benefit speculators, forward traders, gamblers and traders, and never the producers.
Submitted by nreddy on Tue, 19/07/2011 - 14:15