Target Price Reform will promote the healthy Development of Cotton Industry

Since 2004, China has established a cotton price adjustment system based on temporary collection and storage policy, agricultural subsidy system, import and export adjustment and other measures, which has achieved the goal of increasing farmers' efficiency and increasing farmers' income. to a certain extent, it has played a positive role in the sustained and healthy development of the cotton industry in important cotton-producing areas in China, but at the same time, some potential problems in these policies have become increasingly prominent. At this time, the new policy of cotton industry-target price subsidy policy arises at the historic moment.

The reform of the target price of cotton is advancing steadily.

It is understood that the target price reform policy implemented by the state in Xinjiang stipulates that when the average cotton price during the picking period (September to October) is 19800 yuan / ton lower than the target price, the state will directly subsidize the price difference between the two to cotton producers. When the average price is higher than the target price, no subsidy will be issued.

It is reported that the goal of the cotton target price reform in Xinjiang is to protect the interests of cotton producers and stabilize the production of Xinjiang growers. But the country no longer carries out the collection and deposit according to the fixed price, the effect of the market mechanism on the price will undoubtedly increase.

Zhang Xiulin, deputy director of the supply and Marketing Society of the Xinjiang production and Construction Corps, said at the 2014 Zhengzhou Agricultural products (Cotton) Futures Forum that when the market price is lower, the planting income of growers can be subsidized through the target price. this effectively protects the enthusiasm of farmers to grow cotton, and is of practical significance to protect the country's high-quality cotton and promote the sustained and healthy development of the cotton industry in Xinjiang.

In Zhang Xilin's view, the target price reform will not only improve the ability of the Construction Corps to cope with the market, promote the Corps to reform the current cotton management system, speed up the adjustment of the cotton industrial structure, but also improve the quality of cotton in the Corps. He explained that although the state has promoted the development of the cotton industry and protected the interests of farmers through collection and storage in recent years, there has been a decline in the overall quality of cotton. The marketization of cotton prices will also promote the improvement of this phenomenon.

The Futures Daily reporter learned that the bingtuan put forward "six unifications and one guarantee" in terms of the implementation rules of the cotton target price subsidy policy. That is, unified management methods, unified settlement platform, unified brand, unified sales, unified pricing, unified participation in hedging. "one guarantee" is to ensure quality, which is the key to the sustainable development of cotton in bingtuan.

Bid farewell to high-priced cotton, textile enterprises will enhance their competitiveness

How does the target price policy affect the cotton industry chain? Wang Wanxiang, general manager of China Cotton Group Co., Ltd., said that the purpose of this policy is first of all to ensure the income of cotton farmers, while paying attention to the market to form prices, reasonably guide production, circulation, and consumption, and promote the competitiveness of textile enterprises. generally speaking, it is to make the whole industry coordinated, healthy and sustainable development. Since the implementation of the pilot project, great changes have taken place in the financial environment of the whole market, which has a great impact on every link of the industrial chain.

From the point of view of cotton planting, the first thing is to ensure the income of cotton farmers, but also contribute to the planting and optimization of cotton production. Wang Wanxiang believes that the development of the cotton industry in Xinjiang is in the process of transforming to intensive and large-scale production and planting, and machine picking is used instead of labor in many places, reducing costs and promoting cotton production.

The target price policy not only ensures the interests of cotton farmers, but also bid farewell to the era of high-priced cotton. "although this year is the first year of the implementation of the cotton target price, which is only piloted in Xinjiang, the whole industry has changed, and gone are the days when cotton processing enterprises used to rely on policies to make a living. The price gap between domestic and foreign cotton is constantly narrowing, cotton prices are truly regulated by the market, textile enterprises will bid farewell to the era of high-priced cotton, and China's textiles will also be more competitive in the international market. " The head of a cotton spinning enterprise in central China told Futures Daily.

In Wang Wanxiang's view, the pilot target price policy also helps to straighten out the price relationship between cotton and textile, so that the competitiveness of textile mills can be restored and improved. "this phenomenon is more obvious after the listing of new cotton, the price of new cotton has been falling all the way after the listing, although the price of cotton yarn is also falling, but the range is far less than that of cotton, and the profit margins of textile enterprises have rebounded obviously."

The spot market of cotton flowering period will be more closely integrated.

During the conversation with the participants, the reporter learned that at present, the price gap between domestic and foreign cotton is gradually narrowing, from 6000 million yuan / ton before to 2000 million yuan / ton now. "after achieving the target price subsidy policy, the narrowing of the price gap between internal and external cotton will be a long-term trend." Ren Xingzhou, director of the Market economy Research Institute of the Development Research Center of the State Council, said.

The reporter learned from the data of customs imports of cotton yarn that since April this year, the number of cotton yarns imported into China has declined significantly. "the use of domestic cotton yarn has also been greatly improved than before, which is of great significance to promote the healthy development of the cotton textile industry." Wang Wanxiang said.

The cotton enterprises attending the meeting told reporters that in the "cotton collection and storage era", the circulation enterprise was basically an acquisition and processing plant, and the cotton was bought and processed and handed over to China Cotton Storage. After the pilot implementation of the target price, domestic cotton can be fully circulated in the market.

"when the market forms the price, it should be said that our business risk is also higher than before, but this can just promote enterprises to change their business philosophy, change the previous concept of relying on national policies to carry out business, and develop towards market-oriented and international operation. At the same time, in operation, we will pay more attention to the quality of cotton acquisition and processing, pay attention to the prevention and control of risks in the future and present, and pay attention to domestic and international cotton management, which will also help us to implement the "going out" strategy and participate in international competition. " Wang Wanxiang said.

Ren Xingzhou said that the increase in the risk of spot operation has precisely left a huge space for futures. Enterprises can use the futures market to find prices, avoid risks, spread risks, and lock in costs, and the spot market of agricultural products will be more closely integrated.