Target Price Reform promotes the structural Transformation of Cotton Industry

In 2014, China launched the cotton target price reform pilot in Xinjiang, and cancelled the temporary cotton collection and storage policy nationwide. How is the reform pilot progressing? What results have been achieved? What is the room for improvement in practice? On these issues, the reporter interviewed the cotton target price reform pilot evaluation expert group experts.

Experts believe that at present, Xinjiang cotton target price reform overall progress smoothly, each market subject basically adapted to the market-oriented operation mechanism, achieved preliminary results, but all aspects also reflected some difficulties and problems. At present, the key is to pay the subsidy funds accurately to cotton growers. The next step should be based on the overall situation of cotton industry development in China, comprehensively and systematically evaluate the cotton target price policy, perfect the operation methods, simplify the operation procedures, and actively and steadily promote the reform of agricultural product price formation mechanism in China.

Pilot achieved initial results

Cotton market price formation mechanism initially established cotton textile enterprises tend to improve the business situation in the field of cotton processing resources optimization integration

"One of the outstanding achievements of cotton target price reform is to straighten out the cotton price formation mechanism, obviously enhance the synergy between seed cotton price, lint cotton price and international cotton price, and obviously strengthen the market awareness of various market entities." Liu Yu, associate researcher of the Institute of Science and Technology Policy and Management Sciences of the Chinese Academy of Sciences, believes that the cotton market price formation mechanism has been initially established.

According to reports, when the temporary storage policy was implemented in 2013, almost all lint cotton went into the national reserve, and the price fluctuation of seed cotton purchase was only a few cents per kilogram. After the reform, processing enterprises directly connected with textile enterprises, the number of buyers and sellers in the lint market was large, close to a completely competitive market, and the lint market price began to form. Seed cotton purchase price also fluctuates synchronously with the local supply and demand relationship and the spot price of lint at home and abroad. The current fluctuation range has exceeded 1 yuan/kg. Liu Yu believes that what is worthy of affirmation is that, under this circumstance, Xinjiang did not appear large-scale reluctance to sell, cotton purchase and sale of each link coordination operation mechanism is gradually adapting to the needs of reform.

The second effect of the target price reform is that the operating conditions of cotton textile enterprises tend to improve. In 2014, the price of cotton was formed by the market, and the government gave 500 yuan/ton and 1000 yuan/ton freight subsidies to Xinjiang cotton and yarn used by cotton enterprises respectively. The cost of raw materials for production of textile enterprises dropped sharply, and the operating conditions generally improved. According to some data, from January to October 2014, fixed asset investment in Xinjiang textile industry increased more than double year-on-year, and more than 40,000 new jobs were created. According to customs import cotton yarn data, imports began to decline from April 2014, and domestic cotton yarn usage increased.

The initial establishment of market price formation mechanism promoted the optimization and integration of resources in cotton processing field. "Processing enterprises should find buyers by themselves and bear all market risks. Some uncompetitive processing enterprises gradually withdraw from the market, which is a good thing for optimizing resource allocation." Liu Yu said. In addition, Xinjiang Autonomous Region in the identification of processing enterprise qualifications, excluded some credit quality is not good, there are arrears of farmers and strength is not strong, which also promoted the optimization and integration of resources.

There are currently three major issues that need to be addressed.

The difficulty of paying subsidies increases the degree of organization of cotton transportation out of Xinjiang and the poor risk-aversion ability of cotton-related enterprises. The task of structural adjustment in traditional cotton areas is very heavy.

2014 is the first year of the target price reform pilot, experts pointed out that in the pilot process exposed some problems need special attention.

First of all, due to the superposition of the implementation of the new policy and the impact of cotton disaster, it is more difficult to pay subsidies.

Qin Fu, director of the Institute of Agricultural Economics and Development of the Chinese Academy of Agricultural Sciences, analyzed: First, due to the low purchase price of seed cotton this year, the production reduction in some areas due to disasters, and the reluctance of cotton farmers in some areas to sell, the income from selling cotton decreased. Second, the labor cost of cotton has risen. In some areas, the cost per mu has increased by about 200 yuan due to disaster re-sowing; the cost of picking up has risen obviously, and the cost of picking up "second crop flowers" and "flowers after frost" in some areas has approached 3 yuan/kg. Third, the gap between individual selling price and average market price leads to deviation of cotton farmers 'understanding of the new policy. In addition, the slow progress of lint sales, the long time and high cost of gin factory funds, especially the Xinjiang Production and Construction Corps reflect the slow return of funds, which may affect the secondary settlement of cotton sales to employees.

Secondly, the organized degree of cotton transportation out of Xinjiang and the risk-avoiding ability of cotton-related enterprises are poor. In previous years, more than 80% of Xinjiang cotton was transported to the inland every year, and the railway department directly connected with the cotton storage; after the reform, the gin factory sold cotton directly to the market, so it was difficult to organize and coordinate the railway transportation capacity. From the cotton futures spot market, domestic enterprises use futures to effectively manage risks is quite insufficient, futures trading speculation is strong.

Thirdly, the task of traditional cotton area structure adjustment is very heavy. "The market price monitored by the Xinjiang pilot is the average price of the whole Xinjiang, while the price of the sub-optimal cotton area in northern Xinjiang is lower than the average due to low seed cotton yield and poor quality. At the same time, cotton farmers in inland cotton areas will be subsidized by 2000 yuan per ton. Cotton farmers will directly face market risks and the problem of adjusting planting structure." Gao Liangliang, associate researcher of the Institute of Rural Development of the Chinese Academy of Social Sciences, believes that how to ensure the smooth transition of the new and old policies and the new and old systems, ensure that the cotton area in traditional cotton areas is not reduced rapidly, the income of cotton farmers does not decline rapidly, and steadily promote the optimization and adjustment of agricultural structure and promote the stable growth of farmers 'income needs in-depth research.

Comprehensive policies should be adopted to promote target price reform

Pay subsidies to cotton farmers as soon as possible to promote Xinjiang cotton external adjustment and sales research, comprehensive measures to upgrade the cotton industry, continue to do a good job in policy propaganda and interpretation, policy summary and evaluation related work

At present, the cotton target price reform pilot has entered the critical stage of subsidy payment. "The key is to get subsidy money to cotton growers precisely," Qin said. Pilot areas should do a good job in three aspects: first, do a good job in preparing for subsidy issuance, focus on verifying data such as cotton sales volume, and ensure accurate payment at the fastest speed after the central subsidy funds are in place. Second, deal with the ownership of subsidies for circulating land and the secondary payment of cotton sales, complete the adjustment of planting certificates as soon as possible, and ensure that subsidies are distributed to actual growers; the Corps shall carefully sort out the secondary payment of cotton sales to ensure that the two payments are in place in time. Third, make good use of subsidy funds as a whole. When calculating the subsidy amount to each prefecture, we should comprehensively consider market price, production cost, damage due to disaster and other factors and three pilot modes in Aksu Prefecture.

Measures should be taken to promote Xinjiang cotton export and sales. Continue to strengthen market regulation and public opinion guidance, guide textile enterprises to increase domestic cotton procurement, and improve the degree of organization of Xinjiang cotton export. Relevant departments should strengthen the supervision of cotton futures market, encourage cotton processing enterprises to hedge through futures market, and improve the industrial correlation degree of cotton futures market and the benign interaction degree of spot market.

Study comprehensive measures to upgrade cotton industry. "The target price alone is not enough to improve the competitiveness of Xinjiang cotton. If the policy insurance, infrastructure construction investment, scientific and technological research and development and application cannot keep up with each other, it is difficult for Xinjiang cotton industry to become bigger and stronger, especially if there are no policies and measures to encourage enterprises in printing and dyeing links to gather and develop in Xinjiang, it is difficult for Xinjiang to share the industrial profits from raw material production to finished clothing sales." Liu Yu believes that Xinjiang and the mainland should be coordinated, research and establishment of production, processing, sales as a whole of cotton spinning industry, according to the principle of differentiation to support the development of Xinjiang cotton spinning industry. At the same time, we should vigorously develop machine-picked cotton, promote the transformation of cotton production and management mode and improve the cotton production and marketing data information system.

We should continue to do a good job in publicizing and explaining policies. Xinjiang cotton areas should focus on publicizing the gap between individual selling price and market monitoring price and the subsidy method for the second settlement of cotton sales in the Corps, and inland cotton areas should guide cotton farmers to adjust planting structure actively to adapt to market changes.

Experts also suggest that policy summary evaluation should be done well. Based on the overall situation of China's cotton industry development, a comprehensive and systematic evaluation of cotton target price policy should be carried out by summarizing the work at the government level and entrusting a third party to carry out independent evaluation.