I. Introduction
II. Problems Faced by Textile Industry
III. Problems Faced by The Cotton Grower
IV. Mixing Facilitators
V. Integrated Cotton Cultivation (Contract Farming ) – A Panacea For All Ills Of Cotton Economy
VI. Benefits From Integrated Cotton Cultivation (Contract Farming)
VII. Milestone Reached in ICC
Guidelines For Integrated

I. Introduction :

• With the liberalization of world trade following the  formation of the WTO, quality and price competitiveness have become the most important criteria for good export performance.  Even for domestic use, the textile goods will have to excel in quality and be competitive in price when the Indian markets become open to foreign  goods that  will find unlimited access into our country after 2004. 
• One of the means to equip ourselves to face the challenges of the new world trade order is to ensure a strong a raw material base particularly for cotton which is still the most preferred fibre for textile manufacture in India. The cotton production system in our country is beset with several problems all of which can not be tackled by programmes like the Technology Mission on Cotton (TMC). 
• This note discusses Integrated Cotton Cultivation (Contract Farming) which is perhaps the only instrument to ensure that (i) Indian Mills get unmixed cotton of international levels of quality and purity in required quantities at reasonable price and at the same time
  (ii)  the grower is assured of good quality inputs and technical advice on crop management resulting in higher yield, lower cost of cultivation and better quality cotton besides a guaranteed buyer.

II. Problems Faced by Textile Industry :

• Textile mills in the country are facing the following  problems relating to raw material availability :
  1. Indian cotton is expensive and is also of low quality.  The fibre attributes like maturity and strength are poor.
  2. Trash and contaminants in Indian cotton are excessive.
  3. The bales contain a mixture of fibres from different varieties.  The average quality of fibres in a bale shows considerable variation and hence the mills are not able to maintain yarn quality at desired levels.
  4. Most mills particularly the export-oriented ones fail to satisfy the needs of the buyer because of the inconsistency of yarn quality.

III. Problems Faced by The Cotton Grower :

• The Indian grower too is facing several problems relating to cotton cultivation, which are as follows :

(i) Poor Seed Availability :

• In the first place, the grower does not know what kind of cotton or the mills need variety.
• Even if he knows, he is not able to get good quality seeds because certified seed supply in the country is inadequate.

(ii) Ineffective Transfer of Technologies :

• Many farmers are illiterate and do not have access to scientific crop management methods.
• They rely on traditional beliefs and are unable to get high yield.
• Most farmers use large quantities of pesticides and fertilizers without knowledge about their need or effectiveness.
• Spurious pesticide trade ubiquitous in the country also imperils effective pest management.
• As a result, the cost of cultivation is high and the profitability in cotton cultivation has eroded to negligible levels.

(iii) Problems in Marketing :

• The average farmer is not knowledgeable on market trends or price levels.
• With the small quantity of cotton in his possession, the farmer does not have any bargaining power.
• Being perennially poor, he can not afford to hold the stock for long.
• He is thus compelled to sell the cotton at any price offered by traders
• All these are problems that undermine the confidence of the poor farmer.

IV. Mixing Facilitators

• Mixing of cottons is facilitated by several factors :
1. Thanks to the excellent agricultural research set-ups in public and private sectors, hundreds of varieties and hybrids are available for cultivation.
2. Farmers’ land holdings are very small, the average farmer owning as little as 2 hectares of cultivable land.
3. Moreover, the farmer enjoys the freedom to choose seeds of any variety for sowing.
• As a result, the cottons that arrive at markets are dissimilar in quality and they tend to get mixed.

V. Integrated Cotton Cultivation (Contract Farming ) – A panacea for all ills of Cotton Economy :

• All the above problems can be solved by organizing farming in a co-ordinated manner under the leadership of a Co-ordinating Agency (CA).
1. The starting  point in the organized farming chain would be the textile mill whose requirements are to be the basis for cotton cultivation.
2. The Co-ordinating Agency will bring the farmers in a village or adjoining villages into a contract to cultivate a particular variety of cotton required by a textile mill.
3. The farmers will form an Association, not necessarily registered, such that the CA will be able to deal with a manageably small group of representatives of the Association.
4. The CA will undertake to purchase the entire crop harvested by the farmer group at prevailing market rate with premium for quality.
5. The farmers in turn will undertake to sell the cotton exclusively to the CA.
6. The group of farmers will be instructed to cultivate cotton with the technical advice on crop management including IPM practice from a Team of experts consisting of a Breeder, an Agronomist and an Entomologist engaged by the CA.
7. The CA will ensure supply of inputs to the farmers at wholesale prices so that expenditure could be kept at the lowest possible level.
8. CA will help farmers in getting back credit to buy inputs in time.
9. CA will also help farmers in the scheme to secure insurance at low premium rates.
10. While harvesting cotton and transporting it to the ginner, the farmers will be required to follow Best Management Practices prepared by Mini Missions III & IV of Technology Mission on Cotton.
11. The CA will arrange to process the cotton in a modernized Ginning factory into standard bales of contamination-free, low-trash lint, following the Best Management Practices.
12. Bales will be sold to the targeted mills at market price with premium for quality as per terms of contract.

VI. Benefits From Integrated Cotton Cultivation (Contract Farming) :

(i) For Textile Industry :

• Textile mills will get assured supply of good quality uncontaminated and unmixed cotton in sufficient quantities at reasonable price.
• Mill will be free from the hassles of sourcing good quality cotton, which at present eludes the Indian market.
• Mills will not have to involve themselves in the arduous task of importing good quality cotton.

(ii) For the Cotton Grower :

• Buying seed will no more be a nightmare for the farmer.  Quality seeds of the appropriate variety will be supplied by CA.
• Inputs purchase will be hassle-free.  Good quality fertilizers and pesticides will be supplied through involvement of CA at reasonable rates.
• Low interest loan will be available to them for purchase of inputs.
• The farmer will get the benefits of modern technologies in crop management to reduce expenditure and maximize productivity.
• Marketing of cotton will be easy for the farmer.  He will get better price for the produce.
• The Government may come out with concessions in future to benefit farmers in Integrated Cotton Cultivation.

(iii) National Benefits :

• In due course corporates may enter into the business of cotton cultivation and thus change the very complexion of Indian farming.

VII. Milestone Reached in ICC :

1. Awareness meetings to propagate ICC were organized by Technology Mission on Cotton (MMs III & IV) on 3 occasions at Hyderabad (4.5.2002), Pollachi (2.6.2002) and Ahmedabad (24.6.2002).
2. Technology Mission on Cotton has offered to extend the benefits under Mini Mission – II to farmers in ICC Schemes.
3. NABARD has agreed to extend low interest credit through rural Co-operative Banks to ICC farmers.
4. United India Insurance Co. has come forward to reduce crop insurance premium from 7% to 3%.
5. In the private sector, one Textile Mill (Super Spinning Mills, Coimbatore) and one Ginning Factory (Appachi Cotton Co., Pollachi) have taken up Integrated Cotton Cultivation (Contract Farming) involving hundreds of farmers.
6. The Cotton Corporation of India Ltd. Has taken up ICC schemes in four States namely, Gujarat, A.P., M.P. and Orissa covering a total area of over 5700 hectares and involving over 11,000 farmers during the 2002-03 season.

Guidelines For Integrated

Cotton Cultivation

• The various management steps needed in Integrated Cotton cultivation are briefly discussed below.  For agencies interested in contract farming, these steps will serve as guidelines while formulating farming schemes.

(i) Who should organize ICC? :

• A corporate body, a co-operative society, an NGO, a ginner, a trader or just anyone could take the lead in organizing contract farming as a business endeavour.
• The individual or the organization will be referred to as the Co-ordinating Agency (CA).

(ii) Ascertaining Mills, Requirements :

• The CA should get in touch with a few textile mills and ascertain their requirements of cotton in terms the number of bales and the quality/variety of cotton they prefer to purchase.
• A formal contract may be signed with the mill for the purchase of a specified number of bales of a particular staple class and spinnability at prevailing market price or any mutually agreeable terms.

(iii) Selection of Farms & Farmers :

• Select an area of assured rainfall or one with irrigation facility.
• With the help of  State Department of Agriculture, select a few adjoining villages whose farmers numbering not more than 500 will have an ownership of at least 1000 acres of land such that the scheme will produce about 3000 bales of cotton.
• It will be advantageous to induct all the farmers in the villages thus selected.

(iv) Contract with Farmers :

• The farmers should be asked to form an Association, not necessarily a registered one.
• The CA will interact normally only with the representatives of the Association who will have  the written authority from the farmers to deal with CA on their behalf.
• The farmers will sign MOUs with CA to :
• Cultivate a particular variety
• Follow instructions from CA on all matters relating to cultivation and
• Sell the entire produce to the CA at prevailing market price with agreed premiums, if any (a premium of Rs.25 to Rs.50 per quintal will be appropriate).
• The CA in turn will undertake to buy the entire crop at the agreed price.

(v) Purchase of Seed :

• Arrangement is to be made with a seed company to supply good quality seed of the chosen variety  at wholesale price for timely distribution to farmers who will make cash payment directly to the company or through CA.

(vi) Inducting Scientists:

• The CA should form a Team of experts consisting of an Agronomist, Entomologist and a Pathologist to plan out cultivation and to organize crop management right from land preparation to harvesting of cotton.
• Expenditure on hiring the services of Scientists will be borne by CA.
• The Scientists’ Team will interact with the Association as well as with individual farmers and advise them on all steps needed in farming.

(vii) Procurement and Supply of Inputs :

• Fertilizer/water requirements for the particular villages under the scheme will have to be assessed by the Agronomist on the basis of soil tests as  well as his own familiarity with the agroclimatic features of the tract.
• The CA should accordingly procure fertilizers and supply them to the farmers at wholesale prices against cash payment.
• Optimal use of fertilizers and water should be demonstrated to the farmers.

(viii) Pest Management :

• Identification of pests, monitoring through scouting,  observance of economic threshold  levels, etc., should be taught to the farmers through involvement of the Entomologist.
• The use of the right pesticide and the quantity and mode of application should be demonstrated to them.
• Arrangement must be made with a pesticide manufacturer for supply and distribution at wholesale price to the project farmers.

(ix) Harvesting :

• Picking at the right time and in the right manner, strictly following the Best Management Practices  (BMP) prescribed by TMC, must be organized.
• Avoidance of foreign matter and keeping aside pest-damaged locules must be particularly emphasized.

(x) Payment to Farmers :

• As per terms of agreement, farmers are to be paid immediately after procurement of cotton from each picking.
• Premium at the rate of Rs.25 – Rs.50 per quintal above the market rate to be paid to farmers in the schemes as pointed out earlier.

(xi) Collection and Transportation to Ginnery :

• As per BMPs the Association will ensure that cotton from the project farmers alone is collected  and delivered to the ginnery.
• No other farmer’s produce should be gathered.

(xii) Selection of Ginnery :

• A suitably located modernized ginnery that is well equipped to deliver contamination-free cotton must be contracted to process the entire cotton from the scheme.
• The ginnery should make appropriate use of cleaning machines and ensure that the cotton is contamination-free and with acceptably low trash content.

(xiii) Delivery of Bales :

• Weekly delivery of bales to be made at the textile mill.
• Premium as per terms of contract )eg.Rs.100 per mm above base length; Rs.50 per decimal difference in micronaire above the base value, Rs.200 for trash content of 1% and below, etc.)

(xiv) Loan for Farmers :

• CA should help farmers to get bank credit to buy inputs.  NABARD has promised to arrange for low interest loans.

(xv) Insurance Cover :

• The CA will also help farmers in getting insurance at low premium rates for farmers in the scheme.
• Premiums as low as 3% have been promised by United India Insurance Co.