Price Volatility in the Cotton Yarn Industry: Lessons from India

By Alec Crawford, Vijaya Switha Grandhi on November 19, 2007
The last in the series of seven case studies examining national responses to the commodity price problem, this paper looks at how India has addressed cotton yarn price volatility in the handloom sector.

In an era of modernization and globalization, India's handloom weavers have found their margins squeezed by volatile cotton yarn prices, increasing domestic and international competition, and a crowded value chain. With millions of artisans involved in the weaving sector, the challenge of addressing handloom income volatility is a significant one, however efforts thus far—at both the macro and micro level—to solve the problem have been met with mixed success.

This study examines the steps India has taken to address the yarn price vulnerability of its handloom weavers. It begins by describing the importance of the cotton industry to the country, before moving on to discuss both the cotton yarn value chain and the price volatility which affects each actor along it. It then focuses on the national and local interventions which have been initiated to address this volatility, and their varying degrees of success and failure. The paper concludes with a set of recommendations for policymakers.

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IISD, 2007