Monsoon plays spoilsport for cotton seed companies

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July 02, 2015 HYDERABAD: Hybrid cotton seed producers are rueing the aggressive initial surge of the monsoon, saying that the above average rains in most of India last month have resulted in a 15% drop in cotton crop acreage, which means a further squeeze on their profit margins.

Seed companies said this came at a time when they were struggling to deal with a sharp reduction in hybrid seed prices announced by some state governments such as Maharashtra.

Good rains in the past month have encouraged farmers in cotton-growing states to switch to paddy and pulses, crops that require more water than cotton, resulting in a near 20% year-on-year fall in cotton crop acreage in northern India, a major cotton producing region. In the south, Karnataka, another big cotton producer, has seen the area under the crop fall 10%.

"The acreages shifted mostly to paddy and pulses," said C Mithun Chand, executive director at Secunderabad, Telangana-based Kaveri Seed CompanyBSE -0.31 %.

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