In August 1998, the failure of cotton crop sparked off a wave of suicides among cotton farmers in Andhra Pradesh. The farmers burned a section of experimental cotton crop in Karnataka and Bangalore (in November) fearing that the low crop was the result of the now-infamous `terminator' gene seeds.Further, international cotton prices have been declining since mid-1998. Reflecting the international trend, Indian cotton prices also fluctuated by 15-35 per cent. Subsequently exports of the overpriced Indian cotton (compared to international prices) declined.

The textile mills, exporters and cotton traders in general refused to take advantage of the facility given to hedge their risks in the market, both domestic and international. So, after all this, let's have alook at what's in store for the cotton economy during 1999?

Primarily, six things. First, with the continuing demand recession, cotton prices are likely to fluctuate in a narrow band in 1999, both in India and in the international market. This is despite the fact that the overall output will be lower than in last cotton year (October 1997 to September 1998).

Second, this makes slow acceptability of cotton futures that were kicked off on December 5 at the EICA. In 1999, therefore, acceptability of cotton futures will become meaningful only towards end-1999, whereafter it may pave the way for a relatively stronger acceptance by those connected with the cotton economy.

Three, given the overall suspicion towards the US agro-chemical and biotech giant Monsanto and its Indian partner Maharashtra Hybrid Seeds Co (Mahyco), the ongoing resistance among cotton growers towards the newly introduced `Bollgard' Bt cottonseeds is likely to continue, despite its promises of disease-free cotton seeds that gives higheryield than other cotton seeds available in the country.

Four, cotton output during the current cotton year (October 1998 to September 1999) is likely to be 15-20 per cent lower than 175 lakh bales estimated by the Cotton Advisory Board (CAB) in November. Prices however, are seen to remain stagnant and subdued in 1999.

Five, because of the overpriced Indian cotton, domestic cotton consumers are likely to resort to imports which are cheaper by around 20 per cent. And exports will remain as elusive as ever.

Six, and most important, 1999 will witness some headway in implementation of the recently cleared funding of the much-awaited Rs 700 crore Cotton Textile Mission. This is likely to witness some improvement in the overall cotton yield in the country. Says MB Lall, former chairman, Cotton Corporation of India (CCI), ``Unlike last year, there are little chances of wide price fluctuations in 1999. With international cotton prices declining following better crop and lower offtake, domestic cotton users wouldfind importing cotton is cheaper than consuming local produce.

Lall now acts as advisor to the ministry of textiles for implementation of the three and four mini missions of the CTM. Kotak & Company's executive director (exports), Pankaj Kotak feels: India being part of the global economy will not be able to enjoy the benefits of higher prices despite lower production in 1999. Thrust on marketing and reducing the extra spindelage in the country are necessary for improving the overall cotton economy in the country. The Maharashtra State Cooperative Cotton Growers' Marketing Federation general manager HR Kale says: "Despite possibility of lower crop this year, we have fixed the price at Rs 2,100 per quintal, almost same as in the last year. We don't feel there is any reason for the cotton prices to look up during the year."

But cotton traders at EICA feel lower cotton crop may result in higher prices by mid-1999. Accordingly, they have quoted cotton price at Rs 4,993 per quintal for the April 1999delivery contract, Rs 100 higher than the February 1999 delivery contract.

As is usual, the price trend is linked with the overall availability of cotton in the country. At the beginning of the new year, and two months after the start of the new cotton year (1998-99), contradictory figures of cotton crop are being put forth by various sectors of the cotton industry.Thus, what is most important to be done in 1999 is to improve the method of estimating the availability of cotton during any year. In India this is done in most arbitrary a manner. Says Lall, in the USA, the difference between the estimates of cotton at the beginning and at the end of the year is just 10 per cent, against India's 20-25 per cent. Various vested interest in India give their own version of cotton availability which is surely not accurate.