Cotton Farmers Lose Their Pricing Power

Whether farmers abandon cotton and grow grain or a large number of enterprises fail, behind the appearance is the invisible hand of the market.

Who has the final say or how the price is determined has always been the core proposition of economics.

Since 2008, a steady cotton price has suddenly swerve like a roller coaster.

Why did cotton prices suddenly become so abnormal? During the interview in Xiajin, many old technology authority who had dealt with cotton for half a lifetime even shouted "do not understand".

For this topic, Tian Jiudong, general manager of Xiajin Dexin Cotton Industry Co., told the reporter another commercial story around cotton.

If the cotton bollworm bite the cotton farmers' heart in the 90s of last century, the confusion now comes from the cheap cotton that is represented by American cotton, and the puzzled people are all Chinese cotton farmers, and even the entire cotton textile industry.

Cotton may repeat the mistakes of soybeans and lose the right to speak in the international market.

A

Cotton prices fall and sell cotton

Government's "market support" acquisition

In March 9th, when the reporter came to Xiajin Xin Xin cotton company, he was confronted with factory shipment. Several lorries were waiting to load the truck, and the processed cotton bags were put aside.

"These goods are delivered.

In 2008, at the same time, the international financial crisis came, and the domestic cotton price began to fluctuate sharply. After that, domestic cotton prices seemed to ride on roller coaster, and the cycle of ups and downs became shorter and shorter.

The abnormal "cotton cycle" not only blocked the cotton textile and garment enterprises that were blocked by export, but also severely damaged the enthusiasm of domestic cotton producers.

Tian Jiudong believes that the significance of the open purchase of State Cotton stores is to "support the market" for cotton farmers and protect the enthusiasm of domestic farmers for cotton planting.

From the purchase price of state-owned cotton, it also shows a trend of gradual increase.

In 2012, cotton temporary storage and storage price was 20400 yuan per ton, 600 yuan / ton higher than last year.

To raise the purchase price of the national cotton reserve, Tian Jiudong thought "very timely", "before this year, we were unable to find out the new cotton market this year," the "takeover" purchase price undoubtedly gave you a "bottom".

This is also an important reason for Tian Jiudong's Xin Xin cotton industry to insist on production.

According to the announcement of the China cotton storage information center, as of February 24th, China's cotton reserve management company has acquired 2 million 640 thousand and 900 tons of temporary storage and storage of cotton, including 1 million 105 thousand and 400 tons in the mainland and 1 million 535 thousand and 500 tons in Xinjiang.

According to the National Bureau of statistics, cotton output reached 6 million 600 thousand tons in 2011, an increase of 10.7% over the previous year.

That is to say, half of the output of new cotton in 2011 has entered.

According to the prediction of the US Department of agriculture, the cotton inventory in the Chinese government will account for more than 1/4 of the world's inventory.

B

The supply gap is getting bigger.

Cotton imports in large quantities

According to the basic principles of market economy, the biggest reason for the cotton price drop and the forced acquisition of the market by the state should be the result of the excess supply of cotton and the serious surplus, but it is not the case.

Starting from China's accession to the World Trade Organization in 2001, cotton textile industry has become one of the most profitable industries with low labor costs.

As the world's largest cotton producing country, the national cotton planting area basically stabilized at 70 million mu, and the annual cotton output is about 6 million tons.

The domestic cotton spinning industry uses more than 10 million tons of spinning cotton every year, and the cotton gap in China is kept at around 3 million tons annually.

In 2006, the contradiction between domestic cotton supply and demand reached its peak, and the gap reached 4 million 510 thousand tons.

Even after the financial crisis in 2008, the export of textile and garment industry was blocked, and spinning cotton remained at more than 9 million tons.

According to the data of Orient IgG, from 2000 to 2011, China's cotton production increased from 4 million 410 thousand tons to 6 million 600 thousand tons in 2011, while consumption increased from 5 million 20 thousand tons to 11 million 160 thousand tons, and the gap between supply and demand became larger and larger, and enterprises began to import large quantities of cotton.

The huge differences between supply and demand will naturally lead to a shortage of cotton.

However, from 2009 to now, cotton prices have been falling like a devil in every cotton harvest season.

According to the calculation of Sun Weilong, a cotton grower in Wang Li Zhuang village of Yingcheng street, Xiajin County, the price of seed cotton is more than 5 yuan per catty, and farmers can make a profit, which is not worth 5 yuan.

In 2011, from the beginning of harvest, cotton prices were reduced very low. "I planted 12 mu of cotton and collected more than 5000 Jin of cotton and sold at a low price of 3.35 yuan per catty."

C

Become a net importer of cotton

Or will repeat the mistakes of soybeans.

Since the shortage of cotton enterprises, why domestic?

"The reason is simple: imported cotton is too cheap."

Tian Jiudong, general manager of Xiajin Dexin Cotton Industry Co., Ltd., told reporters that the cotton price of the same grade cotton imported from the United States to Qingdao port was 16000 yuan / ton, and according to the "market price" of last year's national cotton storage, the first class cotton was only 19800 yuan per ton, plus 1000 yuan tax cost per ton, the difference was as high as 5000 yuan.

That is to say, if the domestic cotton is used by textile enterprises, the cost will be increased by 5000 yuan more than that of imported cotton.

"For the textile enterprises which rely on export tax rebates and profit margins are generally 10%, the cost of raw materials can not be digested at all."

Tian Jiudong explained that this is the main reason for the shortage of cotton on the one hand and the collapse of cotton prices on the other hand.

It is worrying that, according to relevant media reports, the US agriculture act 1933 established the cotton subsidy policy. In 2002, the agricultural bill further established export subsidies and restrictive subsidies, and also set up anti crisis subsidies for cotton farmers and sales subsidies for us cotton.

From 1999 to 2003, the US government subsidized cotton rate up to 89%, that is to say, the subsidy for producing 100 yuan cotton was 89 yuan; from 2001 to 2002, the rate of subsidy in the United States was over 129%.

China's subsidy to cotton is only 15 yuan per mu, which is a drop in the bucket compared with that in the United States.

Meanwhile, the United States Department of agriculture has launched many preferential policies to attract Chinese cotton textile enterprises to use imported cotton, such as free use of "American cotton" logo, and the United States Department of agriculture on behalf of its products.

In order to carry out the import cotton business, Tian Jiudong's relatives have set up an international trading company in Qingdao.

In order to limit the impact of foreign cotton imports on domestic cotton market, China's current cotton import quota system is adopted.

For example, the "800 thousand ton limit" means that the quantity of imports within a specified time should not exceed 800 thousand tons, and if it exceeds, a high tariff will be charged.

At the end of 2011, because the price difference between domestic and foreign cotton was close to 3000 yuan / ton, the domestic cotton market oscillated up under the storage and storage support, the huge market price difference and the expectation of the cotton after the market, resulting in the import cotton quota "one ticket difficult to seek" and the price rise sharply.

Facing the impact of imported cotton, Yu Dianping, director of Plant Protection Station of Xiajin County Agricultural Bureau, has felt deeply.

"Cotton production has sounded the alarm at the early warning conference of the key agricultural products damage conference just concluded."

Yu Dianping told reporters that what worries him most is that when the imported cotton is attacked at a low price, the domestic cotton output will be hard to recover if it falls.

Tian Jiudong, general manager of Xiajin Dexin cotton company, is even more severe.

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