India is facing an imminent "cotton crisis" that has gone largely unnoticed, according to Terry Townsend, former executive director of the International Cotton Advisory Committee.
Despite estimates suggesting that India's cotton production for the 2022/23 season will be similar to the previous year, a significant shortfall in seed cotton deliveries to procurement centers has raised concerns. Townsend, a respected figure in the industry, warns that this year's crop will not only be smaller than last year's but potentially as low as 4.3 million metric tons.
The cause of this anticipated shortfall remains somewhat of a mystery, although adverse weather conditions influenced by climate change have played a part. Heavy rains in Gujarat and Maharashtra led to crop damage, while the northern states of Haryana and Punjab experienced a second consecutive year of extensive damage caused by a pink bollworm infestation. Additionally, the prevalence of low-quality seeds with poor germination success and the unpredictable nature of the commodities market have further exacerbated the situation.
These challenges have resulted in a growing number of disillusioned farmers who are switching to alternative crops, contributing to the decline in cotton production.
India, alongside China, is responsible for half of the world's cotton supply. However, its export volumes have been decreasing for the past decade. Townsend believes that India may become a net importer of cotton this year, with imports significantly surpassing exports in 2023/24. This transition poses challenges for the domestic textile industry, which traditionally relies on a steady supply of domestic cotton. Unlike the current practice of purchasing cotton on a short-term basis, importing cotton introduces complexities and longer lead times.
Townsend expresses concern over the apparent denial by major agencies in India regarding the looming disaster. With global cotton production amounting to approximately 24 million metric tons, a deficit of 1 million metric tons has severe implications. The Ministry of Textiles' Committee on Cotton Production and Consumption estimates domestic mill consumption at 5 million metric tons this year, slightly lower than the previous year due to weak demand for yarn in India and global economic concerns. With anticipated cotton production between 5.6-5.7 million metric tons, the committee believes that this will adequately meet domestic consumption, eliminating the need for imports.
However, if cotton production falls well below 5 million metric tons as anticipated by Townsend, time is running out to address the crisis. Rising cotton prices and potential closures of gins and mills could lead to significant job losses. The entire cotton supply chain in India is expected to be severely affected, prompting concerns for the broader industry.
