Cotton prices are projected to stabilize as a result of a 9% increase in MSP

For the 2023-24 marketing season, the Indian government raised the minimum support price (MSP) for cotton by around 9% year on year. Cotton prices, which have plunged by more than 25% in the previous eight months, are anticipated to stabilize after the government raised the commodity’s minimum support price (MSP) by roughly 9% year on year for the 2023-24 marketing season on Wednesday. Cotton producers were upset as a result of the price decline since they were hanging on to their output in anticipation of improved rates, resulting in a cotton scarcity in the market.

Cotton prices have decreased from a peak of Rs 10,000 per quintal in October to Rs 7,200/per quintal. According to industry analysts, if the price decline continues, growers may decide to wait until the following season to sell at the revised MSP of Rs 7,020/quintal.

“The increase in MSP of cotton will also help to cap the downward trend in cotton prices,” said BS Rajpal, a veteran cotton ginner from Maharashtra, which has the highest area under cotton in the country. “Instead of selling cotton at lower rates, farmers may opt to wait and sell cotton at the new MSP to the government in the next cotton season.”

The area planted under cotton is also likely to be aided by the increased MSP. “We were expecting a fall in cotton acreage before the government announced the MSP. However, now the area under cotton can increase by about 5%,” said Pradip Jain, president of, the Khandesh Ginning and Pressing Association.

With the increase in MSP, cotton processors are hopeful of getting enough raw material. “We couldn’t run our mills at full capacity as farmers did not bring enough cotton to the market this year,” said Avinash Kabra, a cotton processor from Dharangaon in north Maharashtra. “Any increase in cotton production due to an increase in MSP will increase the supply of raw material for the cotton-based industry.”

“Increase in MSP is not the solution to increase cotton production in India. We need to improve the productivity of cotton by bringing better technology and better seeds,” said Ravi Sam, chairman, of Southern India Mills’ Association.

The increased MSP is higher than the prevailing market prices. Pushan Sharma, director – of research, CRISIL Market Intelligence, and Analytics, said, “The MSP has increased by about 9% on the year, while the average mandi prices are 14-15% higher than the MSP. Thus, farmers may not be inclined to sell at MSP. This has been the case for the past two years and, consequently, cotton procurement at MSP has been negligent.”

Sharma added, “However, anticipating higher production in cotton for the marketing year 2023-24, if mandi prices witness a decline, this higher MSP will bode well for farmer income in Maharashtra, Telangana, and Gujarat, which are key cotton-producing states.”