The end of cotton "policy city"

The National Development and Reform Commission, the Ministry of Finance, and the Ministry of Agriculture jointly announced the target price for cotton in 2014. At this point, the Central “No. 1 Document” has made substantial progress on the trial of Xinjiang’s pilot cotton target subsidies. Experts believe that the target price pilot means that the implementation of the three-year cotton open-collection and storage policy is terminated. The future cotton price will follow the downward trend of the market and the entire industry chain including farmers, acquisition companies, cotton textile industry and related financial institutions, will not Determine the increase in factors.

Market-oriented

Under the new market environment, the decisive role of the market mechanism in the allocation of resources will be brought into play to increase the efficiency of central government subsidies, rationalize the relationship between domestic and foreign markets, and promote the development of the industrial chain. Industry insiders believe that it is inevitable to adopt target price trials and subvert the existing acquisition structure. Hu Kai, secretary general of the Hubei Provincial Cotton Association, said: “Since its implementation in 2011, the collection and storage policy has played an important role in stabilizing domestic cotton production and protecting the interests of farmers. However, human intervention in market prices has distorted market prices and caused the appearance of “flour expensive”. "Thanks to the situation"; on the other hand, relying on administrative strength will not last long."

In the past two years, the minimum purchase price of cotton was RMB 20,400/t, and the actual market price was much lower than this. The market-oriented entities did not dare to enter the market, and most of the cotton had entered the warehouse of cotton storage. The market downturn led to the Sino-Canadian cotton can only be sold at a “lost loss”. The transaction volume of 18,000 yuan/ton in the earlier period was relatively small, and it was not until April that the selling price was reduced to 17.25 million yuan/ton in volume. This price upside down drastically increases the pressure. The price inversion also weakens the international competitiveness of our textile companies. Hu Kai said: "The US cotton price is 11,000 yuan / ton and the Indian shore price is 9,000 yuan / ton. Cotton textile companies that can't get cotton import quotas can only pay more than 6,000 yuan per ton of raw material costs and lose to the starting line. ”

According to estimates in the industry, the current inventory of China Storage Cotton exceeds 10 million tons, which is almost equivalent to the total domestic demand for cotton for two years. Hu Kai introduced that each year of cotton storage, the product phase is reduced by one level, plus the interest on funds and warehouse storage fees, each ton of cotton in the warehouse lost 2,000 yuan per year, which does not include the acquisition of cotton loans generated Interest and warehouse storage fees. "Finance cannot bear such a huge burden for a long period of time. It also urgently needs to straighten out the cotton market in order to reverse the current difficult situation in the textile industry."

The end of open-bottom acquisitions has led to a downward trend in recent cotton prices. Zheng cotton ** 1405 contract from May 21 last year, 21,800 yuan per ton, down to 17200 yuan per ton, a decrease of more than 20%, while the price of a later delivery of cotton ** is even lower, such as Zheng cotton 1501 contract, That is, the contract for delivery in January next year, the current price hovering around 16,000 yuan per ton. Http://futures.hexun.com/changjiang/index.html Huang Junfei, head of the research and consulting department, said, "Recently, domestic cotton market prices have revolved around the State Reserve Pricing, and the country's RMB 17.25 million/ton has been thrown away. The prices are close.Analyzing some of the factors beyond expectations, I estimate that domestic cotton prices have been weakening before the end of August this year, stabilized after September, and even risen." But there are also relatively pessimistic insiders. Hu Kai said, "The future cotton price will continue to decline until it is close to the international price level."

Uncertainties

According to the reporter’s investigation, the acquisition period of cotton is approaching step by step, and direct supplementation standards have become the focus of the market. According to the pilot scheme, after implementing the cotton target price policy, the producer sells cotton at the market price. When the market price is lower than the target price, the country uses the price difference between the target price and the market price and the planting area, output or sales volume, etc. to the pilot project. Producers in the region give subsidies; when the market price is higher than the target price, the state does not issue subsidies.

Huang Junfei said that because the degree of subsidy is directly related to the cost price of cotton, it involves the interests of upstream and downstream parties in the cotton market, forming a positioning for the entire annual cotton price operating range, and the impact is not weaker than the country’s income collection and storage policies over the years. In the future, the change in cotton acreage and output in China will also be another focus of attention in the industry. Since the trial of the target price for the No. 1 document, the planting area in other regions except Xinjiang is expected to decrease. According to the prediction of the Ministry of Agriculture before this year, the intentional planting area of ​​cotton in China this year will be reduced by 7% from the previous year. However, according to actual situation in some provinces, the reduction in planted area may be much higher than this figure.

Take cotton producing provinces and Hubei provinces as an example. The Cotton Association reported that the area of ​​cotton planted in the province will be reduced by 10% to 20% through the investigation and statistics of the cotton early-warning system. The city of Jingzhou in this province has an intention to plant an area of ​​1 million mu of cotton this year, which is 41 million mu less than last year's real species, a reduction of 29.1%. The reductions in the towns of Luohe and Mishi are as high as 50%. Less cotton farmers changed their cash crops such as grapes and vegetables. The area of ​​intentional planting of cotton in Xiantao City this year was 259,300 mu, which was a decrease of 45,100 mu compared with last year's real plant area, a decrease of 14.84%.

In March of this year, the Hubei Provincial Department of Agriculture issued the Guiding Opinions on the Adjustment of Planting Structures in Cotton-producing Areas, and requested the local cotton-producing areas to do a good job in adjusting the cotton planting structure in accordance with the concept of “reduction, stabilization, replanting, and quality improvement”. Lao Chen, a cotton farmer in Liuhe Village, Linwei Town, said that last year he planted 16 mu of cotton. This year, except for the 4 mu land that cannot be replanted, cotton will continue to be planted, and all other corn will be grown. Hu Kai said that “at this time when cotton is sown, I went to some areas and discovered that many cotton fields are still empty, and some vendors selling seeds also reflect that cotton seeds are not going to sell this year.”

The analysis report of the Yangtze River ** reported that “the main producing areas, especially Shandong, Henan, Hebei, and other inland real estate areas have a relatively strong wait-and-see sentiment before the start of planting this year, but have less impact on the advantageous production areas in Xinjiang. With mild and Xinjiang-only operations, the decline in the planting area in the Mainland will be more pronounced, and the overall cotton production in the country will show a steady decline.” In addition, the policy of acquisition outside Xinjiang has not yet made the market even more confusing. Huang Junfei said that there is a strong atmosphere in the market, and some provinces have been fighting for the same direct subsidies in Xinjiang through their own channels. The final result is still unknown.

Improve production efficiency is the fundamental way out

Faced with an increase in market risk, some people in the industry believe that we should learn from some advanced foreign experience and use various subsidies more flexibly to stabilize cotton production through the cotton planting area.

Huang Junfei introduced that taking the United States as an example, the subsidy to cotton farmers includes three categories: production subsidies, sales subsidies, and trade subsidies. Produce subsidies directly to cotton growers, in addition to direct subsidies, also includes anti-crisis subsidies. Anti-crisis subsidies are subsidized based on price changes. Subsidy starts when the effective price is lower than the target price. Sales subsidies are also subsidies to producers. Cotton farmers can sell cotton directly when the cotton price is high, or they can choose to sell it to the government when prices are low. If cotton prices increase in the future, farmers can choose to return the redemption cotton and sell it again in the market. If market prices continue to slump in the future, farmers can choose to leave the cotton directly in the hands of the government, which will be auctioned by the government.

Huang Junfei introduced that each subsidy has an upper limit. Specifically, the direct subsidy limit that American cotton farmers enjoy each year cannot exceed 40,000 U.S. dollars, and the anti-crisis subsidy that can be enjoyed cannot exceed 65,000 U.S. dollars; the market subsidy that can be enjoyed cannot exceed 75,000 U.S. dollars. If farmers' adjusted total income exceeds 2.5 million U.S. dollars for three consecutive years, no subsidy will be granted unless the cotton farmer's total income is 75% from agricultural production.

Some experts believe that neither subsidies nor support can fundamentally solve the problem. At present, the crux of the cotton issue in China is that the production cost is too high and it does not have international competitiveness. The key to solving this problem lies in substantially increasing cotton production efficiency.

The high production cost reflects the low mechanization rate of cotton planting and picking in China. In Australia and the United States and other major cotton-growing countries, one can manage nearly 500 acres of cotton. In China, the cost of labor is very high. In some places, people are hired to pick cotton. Even workers pay half of their own cotton for compensation. Hu Kai said that in order to solve this problem, it is necessary to do a good job of land transfer to create conditions for large-scale operations. "Cotton only grows one season a year. It takes more time to explore and improve on mechanized operations. However, more than 1,000 mu of land has recently been used in pilot cotton production in Changhua and other places in Shandong. If it can solve technical problems, domestic cotton Planting costs are expected to be in line with international standards," he said.