1. Auction System: This is a popular mode of procurement in many cotton-producing regions. Farmers bring their cotton bales to designated auction centers, where buyers and agents representing spinning mills or traders participate in an open bid. The highest bidder secures the cotton at the prevailing market price.
2. Contract Farming: Under contract farming, farmers enter into agreements with spinning mills or ginning companies before the planting season. The contract specifies the quantity, quality, and price of cotton to be produced and delivered by the farmer. Contract farming provides a stable market and assured income for farmers, while ensuring a steady supply of cotton for the mills.
3. Direct Purchase: In this method, spinning mills or ginning companies directly purchase cotton from farmers at their farms or through local collection centers. This mode of procurement allows for direct interaction between buyers and sellers and enables mills to assess the quality of cotton before purchasing.
4. Cooperative Societies: In some regions, cotton farmers form cooperatives or producer organizations to collectively market their produce. Cooperatives pool the cotton from individual farmers, negotiate better prices with buyers, and provide other services such as storage, transportation, and financing.
5. Government Procurement: In certain countries, governments play a significant role in the cotton industry. They may establish government-controlled marketing boards or agencies that procure cotton from farmers at predetermined prices. This mode of procurement aims to stabilize prices, support farmers' incomes, and manage supply and demand in the domestic market.
The mode of procurement in the cotton industry can vary based on factors such as the scale of production, market infrastructure, government regulations, and prevailing trade practices in the region. Some regions may use a combination of these procurement modes to meet the needs of different stakeholders.