By admin       2018-03-09

In a bid to provide relief to cotton farmers and retain cotton acreages, the government has recently proposed a reduction in the prices of BT cotton seed packets (hybrid cotton seeds) to help farmers� access quality cotton seeds at reasonable rates. While on one hand, the final approval of the move stands to benefit, retain and provide respite to cotton farmers who have been severely hit by pink bollworm attacks in last two consecutive years. On the other hand, it stands to impact the net realisations for seed companies who have been seeing troubled times with increasing pressure on margins. In this article, we discuss and analyse the impact of the proposed move on various stakeholders. The proposal � The government is proposing to cut the price of the BT cotton seeds (Bollgard II) from Rs 800 to Rs 740 per packet (450gm packets). Parallel to this reduction, there would also be a Rs. 10 per packet reduction in the royalty paid to technology provider Monsanto. So this is essentially a Rs. 50 per packet reduction in the net realisations for the seed companies. The background � Over the past years, there have been heightened disputes about cotton seed prices and royalty payments to the technology providers, to an extent that Monsanto has backed off from providing any new technology to India. In 2016, the government had cut the royalty payment to technology providers by almost 74 percent, from Rs 163 to Rs 43 per packet. Along with this the prices of cotton seeds charged to farmers was capped at Rs 800 per packet from the earlier approximate Rs 900-1000. The current proposal stands as a second move in past two years towards reduction of the seed prices with a proposed a 7.5 percent further cut. The farmer�s side � In the last two years, cotton fields have been severely impacted by the pink bollworm which has resulted in crop damage and severe losses for cotton farmers. The current cut stands to reduce input costs for farmers, help retain cotton acreages and ensure deeper penetration of high quality seeds thereby reducing worm attacks. The industry side � While the current cut stands to benefit and support around 8 million cotton farmers in India, it is being largely criticised by the National Seed Association of India (NSAI), who highlights that the margins in the cotton seed business are already under pressure due to increased labor and input costs and any such cut would further hamper the overall profitability of the business as a whole. Moreover, the association proposes an increase in prices for seed packets and warns of seed scarcity in the event of price cuts which would rather give way to low quality seed manufacturers.

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