Domestic Wait-And-See: Inspiration From Us Cotton Subsidy Policy (1)

Although China has become the largest cotton producer in the world,

I. The United States

The United States established the Cotton Subsidy Policy in the 1933 agriculture act. In 2002, the agricultural bill stipulates that production subsidies, sales subsidies and trade subsidies (i.e. export subsidies Step 2) and restrictive subsidies should be applied to cotton.

The highly supportive and overprotective policy of cotton in developed countries has caused confusion in the international cotton market and a heavy burden on the government's finances.

Therefore, under the constraint of WTO framework, it is imperative for most countries to carry out the global cotton free trade and strengthen international competition and cooperation in cotton production.

In September 2002, according to the "peace clause" of WTO, Brazil filed a lawsuit against the United States on the issue of cotton subsidies to WTO.

In April 2003, 4 African countries made representations to the WTO asking for solutions to cotton subsidies.

The issue of cotton became an important topic of the 2003 WTO Ministerial Conference in Cancun.

In June 18, 2004, the WTO dispute settlement body ruled that the US cotton subsidy violated the WTO rules.

From Brazil's appeal to the United States, the Cotton Subsidy game has officially begun.

In the December 18, 2005 Doha round Hongkong conference, the developed and developing countries reached an unanimous agreement: abolishing the export subsidies for agricultural products by the end of 2013 and canceling the export subsidies for cotton in 2006.

Two. Analysis of cotton subsidies in the US

According to the current agricultural Bill 2002, the US government's subsidy to cotton generally includes three parts: production subsidies, sales subsidies and trade subsidies, that is, export subsidies Step 2.

(1) production subsidies

Subsidies for cotton production in the United States include direct subsidies (Direct payments) and anti crisis subsidies (Counter-cyclical payments), and cotton subsidies for farmers.

1. direct subsidy = subsidy rate * subsidy area * subsidy per unit area (subsidy area = basal planting area * 85%)

American cotton growers have signed the annual planting agreement with the US government, and have identified their basic planting area (the average planting area in 1998 - 2001) and the subsidy per unit area in the agreement.

The basic planting area and subsidy per unit area can be applied for subsidy after the government has approved it.

The current US agricultural law of 2002 stipulates that the subsidy rate of direct subsidy is 6.67 cents per pound.

The agricultural bill increased by 1.13 cents / pound compared with 1966.

2. counter crisis subsidy = target price effective price

Anti crisis subsidy is a production protective subsidy launched at the time when the effective price is lower than the target price. The target price is 72.40 cents / pound, which is the lowest protection price stipulated by the current agricultural law of the United States in 2002.

The effective price refers to the sum of the direct subsidy rate and the higher average price in the United States or the CCC benchmark loan price of the upland cotton.

Effective price (Effective price) consists of the following two parts: first, the direct subsidy rate (payments rate); the two is the average price of the cotton price farm in the 12 months of the year (national average farm price) and the country's higher rate of loan subsidy rate (national loan rate).

According to the above introduction, counter crisis subsidy = "72.4 cents / pound -[6.67 cents / pound + (12 months average price of national cotton farm price or higher cotton loan subsidy rate").

The United States Department of agriculture paid batches of anti crisis subsidies in the market year.

The first payment time is the new cotton harvest period, that is, October, the amount will not exceed 35% of the total subsidy; the second payment will not exceed 70% of the total subsidy after February of the next year, but it must not be less than the first payment amount.

(two) sales subsidy

The US cotton sales subsidy refers to the loan supplement subsidy provided by cotton growers, mainly referring to marketing assistance loans.

To ensure that cotton growers who participate in the US Department of agriculture's agricultural product plan carry out normal cotton production, the US government provides them with mortgage free recourse loans, or CCC loans, through agricultural Commodity Credit Corporation.

Cotton growers can use the cotton that has not yet been harvested as collateral to get a loan from the credit company.

The application for CCC loan is closed to May 31st every year for a period of 9 months.

Cotton benchmark price is 52 cents / pound, SLM 1-16, micron value is 3.5-4.9, strength is 25.5-29.4 tex, uniformity is 80-82%, long staple cotton price is 79.77 cents / pound, grade 3, fiber length is 1-3/8; micron value is not less than 3.5; uncompressed), cotton growers can sell cotton in cash, return cash and warehouse charges in cash (the US current agricultural law stipulates that CCC loan interest rate is 1% higher than US Treasury bond interest rate); if the world adjusted price is lower than the loan base price, cotton growers can mortgage cotton to credit company, and the USDA compensates its inadequate part (that is, loan supplement subsidy) according to the loan benchmark price, so that cotton growers get the loan benchmark price. If world adjusted price is higher than CCC loan benchmark price (land)

If the mortgaged cotton is not redeemed on time, it will be auctioned by the United States Department of agriculture.

2002 of the agricultural bill has raised the commodity loan rate (52 rate / lb), which is 0.08 cents higher than the 1996 bill.