The Falling Crop Prices is Evil-Eye for Cotton seed CompaniesHome

Falling crop prices is bad news for seed companies, given implications on demand for their product.

Ground-level reports suggest significant acreage diversion this time, especially to pulses, groundnut and maize whose price prospects appear more promising. Falling crop prices is being seen in cotton, where average kapas realisations of Rs 3,900-4,000 per quintal in 2014-15, against Rs 5,000-plus for the previous year’s crop, has dampened farmers’ enthusiasm to plant.

But companies selling cotton seeds are facing an evil-eye, not just from lower demand, but also inability to raise prices due to controls imposed by state governments in Maharashtra, Gujarat, Andhra Pradesh and Telangana. These four states account for over 70 per cent of the estimated domestic market of 50-51 million packets, each containing 450 grams of Bt and 120 grams non-Bt cotton seeds.

“A normal cotton grower would harvest 10 quintals of kapas and incur expenses of Rs 20,000-22,000 per acre. The corresponding kapas yield for the hybrid seed farmer will be 4.65 quintals, taking an average seed recovery of 300 kg (kapas contains 65 per cent seed and 35 per cent lint). Also, his expenses would work out to Rs 55,000-65,000 per acre, of which Rs 45,000-50,000 is labour costs alone,” noted Sameer Mulay, managing director of the Aurangabad-based Ajeet Seeds.
“Labour, fertiliser and pesticide costs have all gone up, whereas the seed price has remained the same. If our margins are going to shrink, making it difficult to pay our seed growers and invest in R&D, the ultimate sufferer will be the regular kapas farmer,” he said.