The New Deal of Cotton Landed in Xinjiang: The Price Market Determines the Coordinated Development of Upstream and Downstream

The New Deal of Cotton Landed in Xinjiang: The Price Market Decides that the Upstream and Downstream Coordinate Development

Xinjiang is China's main cotton producing area. In recent years, 60% of China's cotton is produced in Xinjiang. Affected by the natural environment, the yield of cotton in Xinjiang is higher than 70% in the mainland, and the quality of cotton is also significantly higher than in the interior.

According to the National Cotton Market Monitoring System (2014 National Cotton Growth Survey Report (August)), the cotton planting area in Xinjiang is about 26 million mu, of which about 17.5 million mu are in local areas and about 8.5 million mu are in the Corps. Total cotton production will reach 4.5 million tons, which is the same as last year.

Since 1993, Xinjiang’s cotton area, unit production, total production, quality and volume have been maintained first in the country. By 2013, Xinjiang’s total cotton output has ranked first in the country for 20 consecutive years. In 2012, Xinjiang's cotton production reached 3.08 million tons, an increase of 6.4%, accounting for the first time that the proportion of cotton production in the country exceeded 50%. At present, cotton income accounts for about 35% of Xinjiang's peasant income, and it accounts for 50%-70% of cotton production counties in southern Xinjiang.

Start the cotton target price reform pilot

On September 17, Xinjiang officially launched the pilot reform of cotton target prices. In 2014, Xinjiang’s cotton target price was RMB 19,800 per ton.

Zhang Xiaoping, deputy secretary-general of the People's Government of Xinjiang, announced to the outside world that Xinjiang will no longer implement a temporary cotton purchasing and storage policy in 2014, and the cotton price will be determined by the market. When the market price is lower than the target price, the state gives subsidies to the cotton producers based on the difference between the target price and the market price, and the target price subsidies are linked to the planting area, the amount of seed cotton to be sold, and the planting variety. If the market price is higher than the target price, no subsidies will be issued.

The pilot reform of the cotton target price reform will explore reforms that promote the decoupling of the price formation mechanism of agricultural products from government subsidies. The goal is to give full play to the market's decisive role in the allocation of resources and ensure that the prices are determined by the market. To promote the coordinated development of upstream and downstream industries.

Xinjiang is also the only province in the country that pilots cotton target prices. This reform pilot has stirred up thousands of waves in Xinjiang's cotton fields.

The reform of the cotton target price reform is of great significance to Xinjiang. Xinjiang cotton-growing areas are mainly distributed in more than 60 counties (cities) in the north and south and more than 110 groups of farms. More than 90% of counties (cities) in southern Xinjiang grow cotton. 50% of farmers (more than 70% of them are ethnic minorities) are engaged in cotton production. About 35% of the per capita net income of farmers comes from cotton-growing income, and the main production areas account for 50%-70%.

Long-staple cotton is coming

In the Xinjiang Cotton Direct Subsidy Rules issued on September 17, special reference was made to the target price subsidy standard for special cotton (including long-staple cotton and colored cotton). The industry believes that this is a positive signal for Xinjiang winter cotton.

According to the subsidy standard, the special cotton (yield part) is 1.3 times the target price subsidy standard for land cotton (production part). Planting area and production of special cotton are counted separately and reported separately.

In an interview, the reporter found that because of the large reduction in production of long-staple cotton, some processing plants have gradually transformed the long-staple cotton production line into a fine-velvet cotton production line. In order to reduce losses, many farmers have incorporated this top quality cotton into ordinary cotton.

Long-staple cotton, scientific name "island cotton." It is named after a long fiber. Because of its high quality and long fiber, it is praised as “the best in cotton”. It is also a key raw material for spinning high-count yarns. High-value textiles and garments, such as high-end dyed yarns and home textiles, and high value-added textiles and garments for export, all require the use of yarns based on long-staple cotton.

At present, only China, the United States and Egypt produce in the world. As a traditional long-staple cotton planting base, Xinjiang accounts for more than 70% of the national long-staple cotton planting area.

According to Wang Xinjiang, a researcher at the National Cotton Engineering Technology Research Center, in recent years, the area of ​​long-staple cotton in Xinjiang has been maintained at approximately 1 million mu, and its output is 20%-30% lower than that of fine cotton.

Awati County, which accounts for nearly 90% of Xinjiang's long-staple cotton planting area, has decreased from 92 million mu in 2011 to about 300,000 mu in 2013. In 2014, the planting area of ​​cashmere cotton in Awati county is relatively large, and the market is expected to be around 600,000 mu, which is a year-on-year increase of 50%.

Wang Xinjiang believes that the implementation of the special cotton direct subsidies policy is conducive to providing special types of raw cotton with higher added value, and is conducive to the transformation of textile and apparel development in Xinjiang to high-end markets.

How to get price subsidies for cotton farmers

The cotton target price subsidy will adopt a subsidy method combining the actual planting area of ​​cotton with the amount of seed cotton sold. 60% of the central subsidy funds are subsidized by area, and 40% are subsidized according to the actual seed cotton subsidy.

According to the new subsidy scheme, basic farmer households and agricultural production and management units need to declare the planting area in advance. After verification, the agricultural, financial, and land departments will establish information files on cotton planting.

Seed cotton should be handed to a cotton processing company that has been certified by Xinjiang. Before the end of January of the following year, basic farmer households will register with their village committees with the seed cotton receipts and planting certificates. After the village committee has verified the information, the township (town) agricultural department will establish a subsidy information file.

Before the end of December 2014, the government will calculate the total amount of subsidy funds based on the difference between the target price and the market price, and the cotton production surveyed by the National Bureau of Statistics. These funds will be allocated to Xinjiang and Bingtuan respectively.

In early January 2015, the Xinjiang Finance Department allocated the total amount of subsidy funds from Xinjiang to the central government, and together with the development and reform departments, the agricultural department drafted a cotton subsidy plan for target price production subsidies. After deliberation, the Xinjiang Finance Department will be responsible for allocating subsidy funds step by step.

Before the end of January and the end of February 2015, the financial department of the township (town) and the financial department of the county (city, district) paid the area subsidy funds and production subsidy funds with the planting certificates of the basic farmers and agricultural production and operation units and the seed cotton purchase bills respectively. .

The three types of cotton planting area will not enjoy this target price subsidy policy. First, the cotton that has not been reported, publicized or reviewed by the planting area will not be included in the subsidy scope. Second, the cotton planted on the land that has been explicitly retired from the country and Xinjiang will not be included in the subsidy scope; the third is the land that has been opened without approval. Or cotton planted on land that is prohibited from reclaiming is not included in the subsidy.

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