Recently, the Chairman of the Indian Cotton Association said that the cotton planting area in India is expected to increase from 12 million hectares (180 million acres) in 2021/22 to 13.8 million hectares (207 million acres) in 2022/23, achieving a substantial growth of 15%. It is basically consistent with the CAI forecast in mid-March. However, some private cotton enterprises and cotton trade in the northern and central cotton regions of India do not recognize the official conclusion that the cotton planting area will increase by 15% year-on-year in 2022. It is generally believed that the increase will reach or exceed 20%. The reasons are summarized as follows:
First, a heat wave hit the northern cotton region in April/May. As cotton fields were mainly irrigated, farmers actively resisted drought and ensured sowing. Therefore, although the increase in sown area was lower than the targets set by various states, it was still worth looking forward to. It is understood that the cotton planting area in Punjab and Telangana is expected to increase by 26% and 55%-65% respectively year-on-year in 2022/23.
Second, this year’s southwest monsoon not only landed several days ahead of schedule but also moved northward quickly, providing conditions for large-scale sowing in the central cotton area of India. Moreover, judging from the practice in recent years, the monsoon generally lingers in the central and southern cotton areas for a long time, with abundant Rainfall helps the central and southern cotton regions. From a time point of view, June to August is the intensive sowing period in the central states of Gujarat, Maharashtra, and Madhya Pradesh. Therefore, in 2022/23, with the blessing of good cotton planting results, outstanding price comparisons, and timely rainfall in the previous year, The growth rate of cotton planting area in the central cotton region is expected to be significantly higher than predicted by all parties.
Third, the Indian government is expected to significantly increase the MSP cotton purchase price to stimulate farmers’ enthusiasm for expanding planting. According to Indian media reports, the Indian government will increase the minimum support price (MSP) for autumn harvest crops by 5-20% in 2022/23 due to sharp increases in agricultural input prices such as electricity, transportation and pesticides. Private cotton companies in Kupang, Mabang and other places believe that considering that the MSP price has been raised twice in 2021, and the superimposed grain and cotton price ratio is relatively high, it is expected that the increase in cotton MSP purchases in 2022/23 may be 8%-10%. However, compared with the increase of less than 5% in previous years, it is still quite attractive to farmers.
Fourth, the Indian textile sector’s proposals to cancel the additional tariffs on cotton imports and ban the export of cotton yarn in 2021/22 have not received response from the Modi government. Industry analysis has shown that it is relatively difficult to introduce and implement in the near future, and it is difficult for farmers, cotton processing companies and traders. It is also a good thing in terms of growth and will help India expand cotton planting in 2022.
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