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Price Controls to Hit Bt-Cotton Growth in Gujarat

May 6, 2008

Price control on Bt cotton seed prices is likely to hit the cotton growing community in Gujarat.
GUJARAT, India - Price control on Bt cotton seed prices is likely to hit the cotton growing community in Gujarat . While the state government is trying to ensure that the commodity is available in the market at a reduced rate, seeds producing and marketing companies maintain that if price controls are imposed, they will have no alternative but to divert the material to the neighbouring Maharashtra where the rates are higher.

The control on prices of Bt cotton seeds in any form would be harmful, opined market experts. There are about 23 players dealing in this commodity in Gujarat and price controls could restrict the sale of top brands which are popular in the state. For example, top selling Rassi brand was so popular that it was outsourced from Maharashtra and sold in Gujarat at a premium.

We do not understand why the price of Bt cotton seed has been made an issue, when farmers in Gujarat are willing to pay higher prices for quality seeds, says a leading Bt cotton seeds producer. The market has adequate stock of materials and the government should not interfere.

According to sources, nearly 4 crore packets of Bt cotton seeds are available as against the expected requirement (consumption) of 2-2.5 crore packets in the country. An official of a Hyderabad-based company said that his company would divert the stock to other states where profit margins are higher. Andhra Pradesh is facing a similar problem when the state ordered to reduce the price of ball guard (BG II) variety of Bt cotton from Rs 925 per packet to Rs 750 per packet (450 grams). To protest the decision, seed producers decided to stop sale of this variety in the state.

MNC seed major Monsanto which is the largest seed company too filed a case to seek a stay order on Andhra government s directive. Thereafter, other states including Gujarat, Maharashtra, Punjab, and Madhya Pradesh followed suit and slashed prices to Rs 750 per bag.

The state also reduced prices of BG I variety in 2006 from Rs 1,350-1,389 to Rs 750 per packet. At present, leading companies engaged in the sale of BG II are selling at a rate of Rs 925 per packet in Punjab and Haryana. With the approval of Bt cotton, the cultivation has increased attracting many companies to get themselves involved in this business. According to market sources, companies engaged in the trade seem to have their orders full.

Last year, Gujarat saw sale of this variety at a premium over and above the MRP because of good performance, the sources added. Last year, Bt cotton crop was cultivated over 40 lakh hectares out of a total area of 92 lakh hectares occupied by cotton. The next season is expected to occupy nearly 60 lakh hectares.

According to G K Gangani, general manager of the Hyderabad-based Nuzivindu Seeds, the performance of Bt cotton is not uniform. Similarly, the expenditure on the front of R&D activities of the companies engaged in the trade also varies. The companies seeking licence from Monsanto have to pay Rs 50 lakh for getting production licence and have to pay Rs 150 as royalty per packet.

In Gujarat , 40% area is occupied with fake Bt cotton. The fake Bt cotton is available in the market at a rate ranging between Rs 200 and Rs 300 per packet. The sale of fake seeds is on the rise as the same is available on credit to buyers.

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