India to Purchase More Cotton from Farmers as China Cuts Imports

India is buying cotton from farmers due to a cut in imports by China that has depressed prices


MumbaiOct. 21, 2015—India will be forced to make large-scale government cotton purchases from farmers for a second straight year, following a cut in imports by top buyer China that has depressed prices, industry officials said.

India spent 160 billion rupees ($2.5 billion) to buy 8.7 million bales of cotton at a government-set minimum support price (MSP) in the marketing year that ended on Sept. 30, up from just 400,000 bales in the previous year.

"During the peak supply season, prices will drop below the MSP level since demand is negligible from China," said Dhiren Sheth, president of the Cotton Association of India (CAI).

Government buying, aimed at supporting farmers, will prevent the dumping of cotton in overseas markets by the world's biggest producer at a time when global prices are near six-year lows.

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