The target price reform of cotton is to make it profitable for farmers to grow cotton.

In early 2014, the state launched the pilot project of soybean target price subsidy for cotton in Xinjiang, Northeast China and Inner Mongolia. With the approval of the State Council, the National Development and Reform Commission, together with the Ministry of Finance and the Ministry of Agriculture, announced to the public the target price levels of cotton and soybeans in 2014, at 19800 yuan per ton of cotton and 4800 yuan per ton of soybeans. New cotton listing is imminent, Xinjiang Agriculture Department on cotton target price reform-related questions answered Tianshan network reporter's question.

Reporter: what are the main contents of the pilot project of target price reform for cotton and soybeans?

Department of Agriculture:

The target price policy is an agricultural support policy that releases price signals to guide market expectations and protects the interests of producers through price difference subsidies on the basis of the formation of agricultural product prices in the market. The main contents of the pilot project of target price reform are as follows: first, to abolish the temporary collection and storage policy for cotton and soybeans nationwide. The government does not interfere with market prices, which are determined by the market, and producers sell cotton and soybeans according to market prices. The second is to implement target price subsidies for Xinjiang cotton, Northeast and Inner Mongolia soybeans. Announce the target price of cotton and soybeans before planting. When the market price is lower than the target price, the state shall subsidize the producers in the pilot area according to the difference between the target price and the market price; when the market price is higher than the target price, no subsidy will be issued. The third is to improve the subsidy method, and the target price subsidy is linked to the acreage, output or sales volume.

Reporter: why should we carry out the pilot project of target price reform?

Department of Agriculture:

Since the reform and opening up, China has persisted in promoting the market-oriented reform of agricultural products, liberalized the prices of most agricultural products one after another, and comprehensively liberalized the grain market and prices in 2004. After liberalizing the prices of agricultural products, in order to protect the interests of farmers and stabilize agricultural production, since 2004, the state has implemented the minimum purchase price policy for rice and wheat in the main producing areas. Since 2007, it has implemented temporary purchase and storage policies for corn, soybeans, rapeseed, cotton, sugar and so on. When the market price in the main producing areas is lower than the minimum purchase price or the temporary purchase and storage price, the state-designated enterprises shall directly enter the market to purchase, leading the market price to rise.

Since the implementation of the minimum purchase price and temporary purchase and storage policy, domestic grain prices have risen steadily, and the overall high prices of cotton, oilseeds and sugar have effectively mobilized farmers' enthusiasm for planting and maintained the basic stability of the production of major agricultural products. grain output has achieved "ten consecutive increases", and farmers' income has increased steadily and rapidly, which has played an important supporting role in stabilizing the overall price level and maintaining the sustained and rapid development of the national economy.

The minimum purchase price and the temporary purchase and storage policy include the state subsidy to farmers in the price, which is a kind of direct price support policy of "price supplement in one". The prerequisite for the effective implementation of this policy is that the domestic market price is lower than the international market price. In the past two years, on the one hand, the prices of agricultural products in the international market have fallen sharply; on the other hand, the prices of major domestic agricultural products have operated at a high level under the support of the lowest purchase price and the temporary purchase and storage policy, and the domestic price has changed from lower than the international market to higher than the import cost. Due to the changes in the above prerequisites, the implementation of direct price support policy is faced with new difficulties and challenges, especially the long industrial chain, cotton, soybeans and other agricultural products which are greatly influenced by the international market. In 2013, the temporary collection and storage prices of cotton and soybeans in China were 20400 yuan and 4600 yuan per ton respectively, while the import duty payment costs were about 15580 yuan and 4060 yuan per ton, respectively, which were 4420 yuan and 540 yuan lower than the domestic temporary collection and storage prices. As the domestic price is significantly higher than the import cost, the main body of the market is unwilling to enter the market to buy, the pressure of the state to collect and store cotton has increased sharply, the cotton reserve has exceeded 90% of the total output, the price relationship between the upstream and downstream is distorted, and the market vitality has weakened, which is not conducive to the sustained and healthy development of the entire industrial chain.

The purpose of carrying out a pilot project of target price reform and exploring the reform of decoupling the price formation mechanism of agricultural products from government subsidies is to give full play to the decisive role of the market in the allocation of resources on the premise of protecting the interests of farmers. let the price formation be decided by the market, so as to promote the coordinated development of the upstream and downstream of the industry. First, the government does not interfere with the market price, and enterprises buy according to the market price, which is conducive to restoring the market vitality of domestic industries and improving the market competitiveness of domestic agricultural products. The second is to change the way of government subsidies to producers from the "implicit subsidy" included in the price to the "explicit subsidy" of direct payment, so that producers can clearly receive government subsidies, which is conducive to reducing intermediate links and improving the efficiency of subsidies. Third, giving full play to the role of the market in regulating the production structure will help to make highly efficient and competitive producers stand out, improve the degree of organization and scale of agricultural production, encourage agricultural technological progress, and control production costs.

Of course, carrying out the target price pilot project will also bring challenges to some enterprises. For example, during the temporary collection and storage period, the cotton purchased and processed by the gin mill can be sold directly to the state to ensure the harvest by drought and waterlogging, and there is no need to bear the market risk, but under the new situation, these enterprises need to directly face the market, find their own downstream users and bear the risk of market price fluctuations, but this is also the normal situation under the conditions of market economy.

Reporter: how is the target price determined?

Department of Agriculture:

In the pilot stage, the method of production cost plus basic income is adopted to determine the target price level. The reason for adopting this method is determined by taking into account such factors as protecting farmers' interests and giving more play to the role of the market on the basis of the current reality of agricultural production. First, it can better protect the interests of farmers. The method of production cost plus basic income can better adapt to the actual situation of rigid increase in the production cost of agricultural products in our country at the present stage. No matter how the market price and production cost change, it can ensure that farmers can grow without loss and profit, and prevent a sharp decline in production. Second, it is conducive to giving full play to the role of the market mechanism. Marketing activities are inherently risky. Farmers are the main body of the market economy, while gaining income through the market, they are bound to bear the risk of market fluctuations. In most industries, the market risk is fully borne by the market main body. Considering the particularity of agricultural production, the state should give appropriate protection to the production of a small number of important agricultural products, but the state can not bear all the market risk. Therefore, the target price only ensures that farmers obtain basic income rather than all income. When the market price falls, farmers should also bear part of the risk of income decline, give full play to the role of market mechanism, and guide farmers to adjust their planting structure rationally. improve the competitiveness of agricultural production and the ability to resist risks.