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India: Bt cotton seed firms seek price hikeqrcode

Mar. 23, 2011

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Mar. 23, 2011

Representatives and members of both the National Seed Association and the Seedsmen Association of Andhra Pradesh sought an increase in Bt 1 and Bt 2 cotton seed price to a minimum of Rs 825 and Rs 1,050 per packet (450 gm) from the present Rs 650 and Rs 750 respectively.

The companies asked the minister to formulate a pricing mechanism that takes into account the increase in cost of production and other factors before deciding on the price, each year.

The present prices were fixed in 2008 by the government under a special enactment made earlier for this purpose. The companies argued that the procurement price alone had increased 58 per cent in the last four years to Rs 419 per packet in 2010 from Rs Rs in 2006 and they could not sustain on the present MRP. Agreeing with the contention that a long-term policy in this regard was imminent, the minister said the government would come out with a reasonable proposal on the price revision for next kharif by next week.

National impact
Any price revision by the AP government will have a national impact on cotton seed operations as other governments have been following the AP pricing as a benchmark in their respective states.

Union Minister Sharad Pawar wrote a letter to chief minister N Kiran Kumar Reddy yesterday advising the latter to lift the control on pricing as the move was hurting the agriculture sector and also companies, according to the representatives.

Bt cotton seed companies in Andhra Pradesh account for 50 per cent of the total seed production in the country. It was in 2006, when the state government first intervened, fixing the price at Rs 750, which was was ruling around Rs 1,800, owing to higher royalty being paid at that time to technology provider Monsanto.

When the Bt-2 variety was introduced in the country in 2007, the state government allowed a price of Rs 925 while keeping the Bt 1 price unchanged.

However, the state government again reduced the price of Bt 1 and Bt 2 to Rs 650 and Rs 850 respectively in the following year.

Governments of several states followed suit asking companies to reduce the prices, thus impacting the cotton seed operations across the country.

Bt cotton seed production stands at 28 million packets apart from a carryover stock of 6-7 million packets as against the projected demand of a minimum of 42 million packets in the next kharif, according to P Sateesh Kumar, secretary of the state association of seed companies.

He said as companies were unable to pay a higher procurement price on account of a cap on their selling price, seed producing farmers were being discouraged from taking up cultivation leading to a large-scale dip.

National Seed Association secretary Harish Reddy said the government should take into account the increase in minimum wages of the labour that accounts for 60 per cent of the production cost of the seeds apart from linking the pricing to the inflation index. Punjab and Haryana governments have already increased the price of Bt 1 and Bt 2 to Rs 825 and Rs 1,000 respectively, he pointed out.

After the introduction of Bt technology in 2002, country’s cotton production reached 503 million bales in 2010 from 302 million bales in the first year.

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