Soaring Cotton Prices Reflect Three Major Problems.

Soaring cotton prices reflect three major problems.

According to the survey and analysis, the reason why cotton prices continue to rise rapidly and maintain high operation in 2010 is, on the surface, due to the decline of cotton planting area in China, the reduction of cotton production due to disasters, the resumption of textile and clothing exports, the increase of supply and demand gap of cotton, and the speculation of cotton market by idle capital. However, behind this surge of cotton prices, there are several outstanding problems that have long existed and restricted the development of cotton industry.

First, cotton growers' enthusiasm for planting has declined year by year, and cotton production capacity has been declining.

First, the comparative effectiveness of cotton planting is weakening. In addition, the annual fluctuation of cotton prices is large, and cotton farmers' enthusiasm for planting cotton is not high. There is great difficulty in raising farmers' willingness to plant cotton under the existing policy arrangements.

According to the cotton farmers in Xinji, Hebei, the state has raised the minimum purchase price of grain for many years, and the grain yield has been growing steadily.

Two, there are more cotton production workers, and the problem of harvesting mechanization has not yet been broken. Cotton production is faced with labor constraints.

According to the survey, compared with other crops, cotton planting more than 20 workers per mu, more than two times of wheat and corn. With the continuous development of urbanization, the employment of rural labor force continues to increase, the cost of labor in agricultural production links is higher and higher, and the special strength of cotton planting labor intensity makes it gradually decline.

Second, the government's ability to regulate and control the cotton market is weak and its role in stabilizing prices is limited.

In recent years, the state has made certain achievements in regulating and controlling the cotton market and stabilizing the cotton price through the control of cotton huff and puff, but the effect of regulation is not satisfactory, especially for the protection of farmers' income.

In the 2008 year of the new cotton market, in the face of the low cotton prices, the state regulated the purchase and storage of the cotton in order to protect the cotton farmers' income. However, because the storage and storage objects were cotton circulation processing enterprises instead of cotton farmers, and the cotton seed cotton was sold out after large scale storage and purchase, the purchase and storage of the cotton seeds had little effect on the protection of cotton farmers' interests. This was also an important reason for cotton farmers to reduce cotton planting area for two consecutive years in 2009 and 2010.

Since September 2010, in the face of increasingly high cotton prices, the state only increased the amount of 400 thousand tons of cotton reserves in September 28th. Due to the limited number and late introduction of policies, the market has not played a proper role in reducing the pressure. Moreover, after the cotton price broke through 25000 yuan / ton in the late October, the state has not yet put in reserve cotton to stabilize the market. In addition, the auction mechanism of purchasing and storing prices has not only played a role in stabilizing the market at some time, but has increased the market tension, and even to a certain extent, has promoted the madness of cotton prices.

Third, the distortion of information data in the cotton industry has created room for speculation in speculative capital.

In the background of the reduction of cotton production in 2010, due to the lack of authoritative, timely and continuous information released by the state on cotton statistics, market information, especially output, planting intentions, inventory, crop growth and weather, the information released by some ministries and trade associations in some countries has been questioned by the market due to their inconsistent caliber, authority and credibility. This further provides larger space for speculation.

According to Ma Yunjie, deputy general manager of Limited by Share Ltd in Shijiazhuang Changshan, recently some hot money and illegal operators have made use of the information asymmetry of cotton production, constantly releasing information on disaster and production reduction in some areas, resulting in an extremely scarce atmosphere for cotton in the market.

Ma Yunjie said that idle money and illegal operators can drive cotton prices to rise and even seriously deviate from the fundamentals of market supply and demand. The lack of authoritative and unified cotton supply and demand data and information release system is an important reason at the central government level.