Date:12/02/2005 URL: http://www.thehindubusinessline.com/2005/02/12/stories/2005021203181000.htm

Back Royal Classic plans Bt cotton contract farming

R. Balaji

A farm worker picking RCH-2 Bt cotton at a farm near Salem. — Shaju John

Salem , Feb. 11

ROYAL Classic Mills of the Tirupur-based Royal group, a leading knitwear exporter, plans to launch a cotton contract farming programme.

The company is investing about Rs 50 crore to set up cotton processing facilities and a wind farm, aimed at creating an integrated cotton-to-garment facility.

The contract farming programme is unique in that Royal Classic is aiming to exclusively buy RCH-2 Bt, the genetically-modified, bollworm-resistant cotton developed by Rasi Seeds of Salem.

Also, it will be a comprehensive programme with leading companies participating in providing inputs, assured price and marketing, and insurance.

According to Mr R. Shanmugam, Managing Director of Royal Classic, RCH-2 Bt meets its quality requirements. A uniform quality of cotton has a decisive say in the uniformity of output and quality, he added.

The contract farming programme is envisaged as a comprehensive project with Rasi Seeds supplying RCH-2 Bt seeds; T. Stanes & Co Ltd of Coimbatore supplying chemical inputs; Royal Classic Mills buying the cotton; and the Cotton Corporation of India acting as a backstop for cotton procurement.

If Royal Classic Mills is not able to procure the cotton for any reason, the Cotton Corporation will step in to purchase the produce and hold it for Royal Classic.

"Therefore, the farmer is assured of a continuous market for his produce," Mr Shanmugam said.

Also envisaged are insurance for the crop and cotton price. Corporation Bank will extend the loan to farmers and the State Agriculture Department is closely involved in the whole project and facilitating the process.

The partners in this contract farming initiative will soon sign an agreement to finalise the project, he said.

The objective is to bring under the mill's control the entire chain from raw material to final product.

With a one-source raw material, the company is assured of identical and consistent quality parameters. "This is a key factor in ensuring the quality of the final product, the garment."

According to Mr M. Ramasami, Managing Director, Rasi Seeds, his company will provide the technical and field support to the farmers for cultivation.

This genetically-modified hybrid was released in the market last year and the output has been observed to be of high quality. Royal Classic currently procures this cotton exclusively from the farmers.

According to Royal Classic's officials, the company hopes to cover about 5,000 acres under contract farming during summer.

This will be scaled up to about 30,000 acres, the output from which would be needed to keep its 25,000 spindles running year around.

The company is also putting up modern ginning facilities to process the cotton.

Also in the pipeline is a solvent extraction unit for processing cottonseeds to extract oil.