Marketing

Introduction Marketing of cotton is a specialised activity by itself involving handling, packing movement of cotton bales, grading, quality tests and problems of payment. As compared to other commercial crops, the cotton has to pass through multiple number of intermediary agencies, as cotton has to traverse through a long route before reaching the end user. The marketing of cotton commences from the close of harvesting of kappas and ends after the lint is procured by the millers. Between these two points, cotton passes through several stages, namely, sale of kappas in primary and secondary markets, ginning and processing, storage, transport to terminal markets and sale of lint to the consuming mills. Primary Market In primary markets kappas is sold by the grower to the village merchant without the intervention of any intermediaries. Secondary Market A majority of the growers now disposing of kappas in the secondary markets, i.e. important trade centers. In the secondary wholesale markets, the business is conducted in accordance with local customs and practices. In centers where regulated markets have been established, bylaws framed by the market committee and approved by the State Governments govern the transactions. Open auction system for each individual seller's produce is generally followed in most of the secondary markets. Terminal Market Cotton lint is sold to the textile mills, exporters and traders dealing with consuming mills or engaged in inter-state trade. Bombay, Coimbatore, Ahmedabad and Kanpur are some of the important terminal markets of which Bombay is the largest. The sellers either directly or through the brokers approach the buyers with samples of cotton and enter into transactions.

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Systems Of Marketing Cotton has to reach the spinning mill through ginning mill passing through commission agents and wholesaler. The farmers normally bring his produce to the nearest market by cart, truck or by other means after packing it in the form of bale. Based on the grades so decided, the cotton lots are put to public auction, wherein, the commission agents or wholesalers participate. The Commission agents do all the works in handling the kappas on behalf of the farmer and arrange to sell it either in presence or absence of the farmer. Storage space, arrangement of auction, inviting tenders, announcement of market rates and market information are managed by the market committee. The market committee collects market cess for its services and commission agent charges his commission. The farmer gets the value of his produce after all these deductions. The wholesaler normally transports the cotton to Bombay or arranges to gin it locally and sell the lint to spinning mills. With the establishment of number of ginning/spinning mills in private and cooperative sector at many taluks and districts, the bulk movement of kappas and lint to weaving mills located at Bombay and Surat is reduced in recent years. The lint/kappas is mostly consumed locally and surplus lint may reach distant spinning mills.

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Problems Of Marketing Problems of Packing and Handling The kappas is packed conventionally in loosely knit bag of Deccan hemp or Manila hemp fibres. The empty bag of hemp, specially knit for this purpose is called "bardan". The bag is flexible and can hold a varying quality of 150 to 230 kg kappas. Packing the seed cotton (kappas) in bardan to make it what is called as bale has resulted into many problems. They are: Difficulties in Packing the Kappas Age old system of packing the kappas in bardan involves hanging of loosely knit hemp bag from the top of the roof and pouring the kappas layer by layer with intermittent application of pressure by legs. This involves a lot of labour time. As the bale is packed manually, the quantity of kappas held in a bale is directly proportional to the pressure applied. Approximately two labours can pack 6-8 cotton bales in 8 hours. A cotton farmer producing about 80-90 quintals of cotton from 8-10 acres hybrid cotton, should be able to pack about 60 bales requiring 20-22 mandays. Exposure of kappas to Dust, Rain Conventionally packed cotton bale is exposed to dust, rain, heat or dirt of many forms during its handling, storage and marketing. This results into the loss of quality of fibres at all these stages. Ultimately, the farmer is put to great loss in terms of reduced quality of the fibres. Difficulties in Standardisation A cotton bale is likely to weigh any thing between 150 to 230 kg. Depending upon the skill and body weight of the labourer at the time of packing, the quantity of kappas held in each bale changes.

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Quality Parameters Fabric quality is mostly governed by that of the yarn from which it is woven, and since the quality of the yarn in turn depends upon the properties of the fibers from which it is spun. The quality of raw cotton which is generally judged from the physical characteristics of the fibre is an important factor. Cotton possesses many qualities to make it a good textile fibre. Its dominant position as a textile raw material is primarily due to its versatility for a wide range of end-uses it can be put to Staple length Average length of individual cotton fibre. Longer the staple - better the quantity. Short staple : 19.5mm and below Medium staple : 20.0mm - 21.5mm Superior staple : 22.0mm - 24.0mm Long staple : 24.5mm - 26.5mm Superior long staple : 27.0mm - 29.5mm Extra superior long staple : 30.0mm and above Ginning Percentage Out turn of lint to seed cotton expressed as percentage by weight normally varies between 24 - 38%. GP %= Weight of lint/Weight of seed cotton x 100 Spinning Quality Depends on staple length, fineness and strength of fibre Expressed in counts. Count is the no. of hanks (one hank = 840yds) found in one pound of yarn. Fineness Related to staple length Expression of the weight per unit length of fibre Influenced by soil Colour Varies from reddish tint to bright shining white Brighter the colour - better the quality Touch Coarseness or finess of lint to touch Cleanliness Lint should be free from impurities. Neppiness Defect of yarn due to tiny knots No uniformity in the thread Yarn is weak Fibre maturity A sample of lint corrected at maturity is of 3 types: Mature (ripe) Half mature (Half ripe) Un mature (Un ripe) Ripe fibres have thickened walls and good convulsion (twist) Un ripe fibres have thin walls lakh of twist and weak, with a tendency to break up during manufacture. Strength of fibre Estimated by means of a fibre-testing machine by clasping the ends of a single fibre between the jaws of machine and applying the strain gradually. The breaking strength of fibre depends upon its area of cross-section, test length, type of testing instrument used, the rate of loading etc., It also depends upon the relative humidity of the atmosphere. The tensile strength of fibre varies for 50,000 to 1,25,000 pounds per square inch. Fine cottons tend to have greater tensile strength than the short and coarse cottons. Convolutions (Twists) The uniform distribution of the convolutions helps to give better inter- fibre grippage. Convolutions confer the following additional advantages Make the fibre equally flexible in all directions. Prevent close packing of fibres in yarn and hence give better cover in cloth. As the frictional contact of adjacent fibres is reduced, it lessens the risk of electrification, if any. The number of convolutions depends on the ratio of cell-wall thickness to ribbon width. The number of convolutions per inch varies from about 150 for Indian cottons to about 300 for Sea Island cottons. Surface Friction The spinning quality of a textile fibre depends not only on its staple length and fineness, but also in its ability to offer sufficient frictional resistance. The effectiveness of friction depends upon the nature of the fibre surface and normal pressure between fibres due to twist. Hygroscopicity Cotton absorbs moisture from the surrounding atmosphere depending on its temperature and relative humidity. Moisture had a marked effect on the tensile strength, elasticity and other properties of the fibre. Rigidity In processing cotton, the fibres have to be twisted to make a yarn. The more rigid a fibre is, the greater is the force required to twist it and vice versa. Modules of rigidity is defined as the ratio of the tangential force per unit area to the angle of twist produced. It depends upon the shape of cross section and the wall thickness of the fibre. Temperature and relative humidity have a great influence on fibre rigidity. At room temperature, the rigidity of cotton fibre is six times that in an atmosphere saturated with moisture. Elasticity Changes in length and volume as well as shears or twists produced by applied stresses are all included in the elastic properties. Cotton fibres are fairly elastic, though they exhibit both the primary creep and the secondary creep to some degree. Plasticity Cotton is relatively non- plastic. Finishing process like shrinking depend on the increase in the plasticity of cotton fibres as they swell in water at elevated temperatures. Cotton quality requirements Count-wise Pattern of Yarn Production The main trends observed from data given. Yarn production in coarse counts (1s to 10s) has come down during recent years. The production in fine and superfine counts (41s and above) has increased during the years. The production in the 31s' - 40s' count range has also increased during recent years. The bulk of yarn production of about 71% comprises of counts in the range of 11s to 40s. The above trends indicate that while attention has to be given for producing cottons suitable for finer counts, greater efforts have to be made to produce cottons suitable for the count ranges of 11s to 40s. Blending with Man-Made Fibres Although the preference for cotton in apparel fabrics is increasing as against fabrics made from purely synthetic fibres, the use of blends of cotton and synthetic fibres is expected to continue for various reasons. The proportion of blended yarns has increased to 13% in recent years. Prior to 1975, imported cottons from Egypt, Sudan, etc., were used for blending with polyester. Research work in CIRCOT showed that superior quality cottons developed in our country like MCU 5, Sujatha, Suvin, Hybrid 4, Varalaxmi, DCH 32, etc. are quite useful for blending. Our cottons, however, need improvement in respect of fibre maturity and trash content. Cottons used for blending should have good fibre strength and extensibility. Deficiencies in fibre quality There are a few important deficiencies that add to lowering the quality of our cottons. We have to pay special attention to eliminate/minimise them so that the general quality of our cotton improves. Variability in Fibre Quality A frequent complaint both from Indian and foreign users of our cottons is about the variability in quality observed even in the same lot of cotton. Leaving aside the factors such as admixture of seeds in cultivation and mixing up of varieties at marketing centers or at ginning factories, there are other genuine reasons like suitability of land/soil for the variety, level of crop management and attention paid to crops by different farmers, etc., which contribute to variability in quality of cottons. Some zoning system along with supply of good quality seeds and other inputs may have to be considered at least for superior quality varieties and hybrids like MCU 5, Hybrid 4, Hybrid 6, DCH 32 etc, Fibre Strength for OE Spinning open end As has been stated earlier, fibre strength plays a very important role in deciding the yarn quality in OE spinning system. Since our spinning industry is being modernised more rapidly at present by installing OE systems, we have to keep in mind the special requirement of fibre strength and orient our research programmes accordingly. Fibre Immaturity Many of the long extra long staple cottons, particularly interspecific hybrids, contain a high proportion of immature fibres. This mars the yarn quality, appearance and also leads to problems in dyeing. It is therefore desirable that cottons have 75% - 80% mature fibres. Ideally, we should aim at 80% mature fibres in our selection programmes. Stickiness in cotton The presence of 'honey dew' in cotton (secretion by sucking pests like aphid, whitefly, etc.,) results in stickiness on account of which severe problems are faced in ginning and subsequent spinning as the fibres stick to the rollers in these machines. Further, the honeydew sometimes leads to black coloured mould formation resulting in loss of quality. Motes Motes or undeveloped seeds with immature fibres constitute another source adding to lowering of yarn quality. The problem is encountered more in hybrid cottons. Although some of them are removed during processing, quite a few escape and enter the yarn and give rise to objectionable faults. Such faults in yarn have to be removed first by a separate process before producing quality fabrics on modern, high-speed knitting or weaving machines, which add to the cost of production. Therefore, this problem has to be kept in mind while selecting parents for evolving hybrid cottons. Trash, Other Contaminants and Seed Coat Bits The average trash content in Indian cottons is about 6% - 7%, which is very high as compared to that in cottons from other countries in the world. It varies from as low as 2% in suvin and MCU 5 to as high as 18% in Wagad, V 797 etc., from saurashtra (India). Besides trash from plant origin, several extraneous materials contaminate our cottons. In our country cotton is harvested by hand picking and as such there is no justification absolutely for high trash content- care is necessary for general cleanliness at all levels starting from picking, storage, transport to market, storage at marketing centre till ginning.

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Cotton Production The Cotton Advisory Board, in its meeting held on 20th September 2005 has placed the 2004-05 cotton production at 243.00 lakh bales of 170 kgs each, as per State-wise details given below: Area in lakh hectare/Production in lakh bales/Yield kgs per hectare   2004-05 2003-04 States Area Production Yield Area Production Yield Punjab 5.09 16.50 551 4.52 10.35 389 Haryana 6.21 15.50 424 5.26 11.50 372 Rajasthan 4.38 11.00 427 3.44 9.15 452 North Total 15.68 43.00 466 15.58 31.00 399 Gujarat 19.06 73.00 621 16.47 50.00 516 Maharashtra 29.80 52.00 297 27.66 31.00 191 Madhya Pradesh 5.76 16.00 472 5.91 19.65 565 Andhra Pradesh 11.74 32.50 471 8.37 27.40 557 Karnataka 5.12 8.00 266 3.13 4.20 228 Tamil Nadu 1.42 5.50 658 1.03 3.75 619 Others 0.62 1.00 274 0.51 1.00 333 Total 231.00 168.00 Loose Lint 12.00 11.00 Grand Total 89.20 243.00 463 76.30 179.00 399 Cotton Demand: Imports & Exports (2005-06) The demand of cotton is expected to total 204 lakh bales by 2005-06. Export comprises ten lakh bales. Mill consumption is estimated at 163 lakh bales Small units are expected to consume 17lakh bales. The ex-factory consumption is placed at 14 lakh bales. The cotton prices are falling due to the devaluation in Asian currencies. Cotton is allowed to be imported under OGL with out any duty impact. Several mills have gone in for imported cotton and already about 12 lakh bales have been ordered for import. The government has allowed the export of 10lakh bales so far. The CAB has also estimated exports at three lakh bales for the year. With lesser exports, there would be more cotton available to the mills in the domestic market and there need not be any fear of scarce supplies. Cotton Production Vs Consumption in India Year Production (in lakh bales) Consumption (in lakh bales) 50-51 32.80 42.10 60-61 56.80 61.10 70-71 53.50 67.70 80-81 78.00 84.80 90-91 117.00 115.50 2000-01 140.00 173.03 2001-02 158.00 171.76 2002-03 136.00 168.83 2003-04 179.00 177.10 2004-05 243.00 194.00 Source : The Cotton Corporation of India Ltd Minimum Support Prices announced by Government of India Variety Basic Staple length (2.5% span length Micronnaire value Prices in Rupees per Quintal 01-02 02-03 03-04 04-05 05-06 Assam Comilla -- 7.0-8.0 1330 1330 1370 1400 1400 Bengal Desi -- 6.8-7.2 1250 1250 1285 1310 1310 V797 22.0 4.2-4.8 1560 1560 1605 1640 1640 Jayadhar 23.0 5.0-5.6 1560 1560 1605 1640 1640 GCOT-12 23.5 4.2-5.0 1485 1485 1530 1560 1560 AK/Y-1 24.0 4.8-5.2 1595 1595 1640 1675 1675 NHH-44(Marathwada /Khandesh) 24.0 3.0-3.2 1595 1595 1640 1675 1675 NHH-44 (Vidharbha) 25.0 3.3-3.7 1620 1620 1665 1700 1700 PCO-2 AP & Kar 25.0 4.8-5.5 -- 1575 1620 1650 1650 F414/H-777/J-34 Raj 24.5 3.8-4.2 1675 1675 1725 1760 1760 F414/H-777/J-34 Hry 25.5 3.8-4.4 -- 1695 1750 1785 1800 F414/H-777/J-34 Pjb 26.0 3.8-4.4 -- 1715 1780 1815 1835 AHH-468 25.5 3.8-4.0 1700 1700 1750 1785 1785 1007/Jhurar/DHY286 27.0 3.7-4.0 1750 1750 1800 1835 1835 LRA-5166 27.0 3.6-4.2 1750 1750 1800 1835 1835 JKHY1/MECH-11 30.0 3.8-4.2 1800 1800 1850 1885 1885 S-6/10 29.0 3.7-4.3 1840 1860 1910 1960 1985 H-4/H-6 30.0 3.6-4.2 1875 1875 1925 1960 1980 RCH-2 30.0 3.4-4.4 -- -- -- -- 1990 Bunny/Brahma 31.5 3.4-4.0 1900 1925 1975 2010 2010 MCU-5 33.0 3.0-3.5 1950 1950 2000 2035 2055 Surbhi 33.0 3.6-3.8 -- -- -- 2035 2055 DCH-32 MP 34.0 3.0-3.3 1975 1975 2030 2065 2100 DCH-32 SOUTH 37.0 3.0-3.5 2075 2075 2130 2170 2200 Suvin 40.0 3.2-3.6 3000 3000 3080 3135 3135 Source: The Cotton Corporation of India Export Orientation The export of raw cotton may be allowed to meet various objectives such as stabilization of cotton price, which is important to both the cotton growers and the industry, ensuring a remunerative price to the cotton growers and maintaining India’s presence in International market as a stable supplier of cotton. For ‘exportable’ varieties of cotton, it is suggested that specific ‘export oriented’ production programme may be implemented, so that the foreign buyers are assured of a regular supply of stipulated quality and quantity. As bulk of the consumption of cotton by the Indian textile industry is ‘medium staple’, value added exports may be concentrated in this category. World Demand and Supply Situation Quantity in million Metric tons Year Beginning August 1 99-00 00-01 01-02 02-03 03-04 04-05 05-06 World Beginning stock 10.46 9.63 9.27 10.50 8.71 8.09 10.27 World Cotton Production 19.12 19.40 21.50 19.30 20.71 26.25 24.96 World Cotton Consumption 19.82 19.76 20.20 21.12 21.32 23.44 24.16 World Cotton Exports 6.13 5.75 6.47 6.62 7.26 7.72 8.41 World Ending stocks 9.63 9.27 10.50 8.48 8.09 10.27 11.07 As per latest ICAC release dated 1st November 2005 Role of Different Species in Production and Textile System Fibre Quality Production Goals Short and Medium Stabilise arboreum area at present level; use in biotic and abiotic stress and export Medium staple Stabilise herbaceum at present level and use for organic cotton Medium and Long Improve hirsutum for irrigated and assured rainfall areas Extra Long Improve barbadense for yield Cotton Exports by India from 1990-91 to 2003-04 Year Qty (in lakh bales of 170 kgs) Value (Rs./Crores) 1990-91 11.9 620.9 1991-92 0.77 38.7 1992-93 13.77 725.3 1993-94 3.90 238.2 1994-95 1.08 83.39 1995-96 8.53 961.16 1996-97 16.82 1655.00 1997-98 3.50 313.62 1998-99 1.01 86.72 1999-2000 0.65 52.15 2000-01 0.60 51.43 2001-02 0.50 44.40 2002-03 0.84 66.84 2003-04 (E) 9.00 NA E : Estimated NA : Not available Source : Cotton Advisory Board (Quantity figures only) Note : Value figures for 1999-2000 are estimated

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Requirement of Cotton Quality And Quantity In 2010 AD In the past – two decades India has become fully self-sufficient in her cotton requirements – both quantity wise and quality wise. The total production in recent years has reached 120-130 lakh bales. Besides meeting the requirements of the domestic textile industry and other sectors, the country has also been able to export sizeable quantity of raw cotton. Export of raw cotton together with export of spun yarns, sowing threads, fabrics, made-ups, garments etc., constitutes a major foreign exchange earning source for our country. The demand for renewable natural fibre like cotton for apparel use is increasing in recent years all over the world and therefore there is good potential for exporting raw cotton and cotton based textile items from our country. Several export oriented units for yarns and made-ups have been established in the country. Therefore, we have to increase our production to meet these requirements as well as the requirements of our own increasing population. In the past, cotton consumption in our country used to be listed under only two heads – viz., mill consumption (composite and spinning mills) and (ii) non-mill consumption. The quantity consumed under the latter head in recent years is estimated to be about 8 lakh bales and is used for various purposes like stuffing of mattresses, preparation of surgical/absorbent cotton, etc. One more source of cotton consumption has been identified – viz., small scale spinning units which use about 5 lakh bales of cotton every year. It is essential that both the non-mill consumption and consumption by small scale spinning units is expected to go up in 2010 AD. Taking into consideration all the above factors, the total cotton requirement is estimated to be about 230-240 lakh bales. future Cotton requirements Various factors to be considered in estimating future requirements are: Per-Capita consumption of Cloth in India At present, the average consumption of cloth per person per year is about 20 square meters, Although the present policy of liberalization in economy and trade is supposed to bring more prosperity and improve the living standards of our population, considering the vast population whose living standard is very poor, it is presumed that increase in per capita cloth consumption, if any, would be very marginal. Trend in Mill Consumption of cotton Mill consumption of cotton has increased substantially over the past 2-3 decades. For the last few years, the rate of annual increase is about 4 per cent and this trend is likely to continue till the turn of the century at which time the mill consumption of cotton would be 140-150 lakh bales. Export of Cotton Textile Materials: As stated earlier, the export of yarns, sewing threads, fabrics, made-ups, garments, etc., account for the major share in our total F.E. earnings. Cotton textiles account for 60-70% of these exports. These exports are expected to increase further in the coming years and hence there would be increase in demand for cotton. Raw Cotton Exports There is a good demand for our cottons in other countries; however, the quantity exported has been varying from year to year depending on our production. Although opinions differ as to whether raw cotton should be exported at all, the Govt. of India now seems to have decided on the policy of allowing exports of minimum of 5 lakh bales every year irrespective of the size of production. This is a very welcome decision from the point of ensuring better price of kappa’s to cotton growers. Looking to the demand in international market, out pest performance and grower'’ interest, we should aim at exporting about 10 lakh bales of cotton per year in future. Requirements in 2010 A.D The estimation of cotton requirements 16 years from now (2010.A.D.) and beyond depends on several factors like rate of growth of population, competition between fibre crop and food crop in India as well as in other countries, clothing habits/styles that may come into vogue, likely changes in processing technology, competition from man-made fibres, demand for Indian cotton in foreign countries, etc., which are difficult to predict. In our own country, the present rate of growth of population is estimated by some sources as 2.0% whereas we have come across a recent report giving the figure as 1.6 – 1.7%. Also it is not certain whether the present rate of increase in cotton consumption taken at 4% up-to 2000A.D. Would be sustainable later. In-spite of these limitations and assuming the rate of increase in cotton consumption as 3%, the total cotton requirement of the country has been estimated at 230 – 240 lakh bales which includes non mill consumption and exports of 12 and 10 lakh bales respectively for the year 2010 A. D.

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