Cotton Prices Continue To Fall, Dezhou Cotton Association Appealed For Subsidies To Help

October is the season of cotton picking and selling in Dezhou every year. At this time in the past, small and medium-sized cotton traders began to walk around the streets and open their scales to rob cotton. Cotton farmers will also convert snow-white cotton into red and red banknotes at this time.

In 2014, Dezhou had a bumper crop of cotton, but Feng Jiangqing, chairman of the Dezhou cotton and cotton cooperative society, encountered the most dismal market in decades. Cotton prices plummeted and cotton farmers fell into losses. Most members of the community were trying to pull cotton into wheat after they had no hope of waiting for government subsidies.

In 2014, the first year after the reform of the national cotton purchasing system, the government cancelled the temporary cotton purchase and storage policy, and let the market decide the cotton price. However, cotton prices plummeted all the way to the lowest level in nearly ten years. The Cotton Subsidy promised by the government after the implementation of the cotton price reform has yet to be clearly defined and fulfilled. The cotton association of Dezhou has submitted an early warning report to the China Cotton Association and government departments in anticipating that the cotton planting area will be greatly reduced next year and endanger industrial safety.

　 　 Cotton market setbacks

This early warning report describes the cotton market at present. At present, cotton farmers are afraid to sell, afraid to sell early and suffer losses; cotton enterprises dare not buy, afraid to take early losses; banks dare not lend money; government departments and cotton associations can not carry out effective work. As of October 20th, the sale of cotton growers in Dezhou was only about 10%, and many farmers had been pulling cotton seeds for wheat.

For the depressed cotton market, Feng Jiangqing, President of Dezhou silver and cotton cooperatives, has a personal experience. This cooperative is located in the national cotton producing county, Dezhou Xiajin County, which was founded in March 2012. The society has concentrated on nearly forty farmers and more than 200 acres of cotton fields. It is one of the largest cotton professional cooperatives in the region.

Dezhou is one of the key cotton areas in China. It has a history of planting cotton for hundreds of years. In 2014, cotton growing areas in Dezhou were drier and drier. The cotton farmers ushered in a bumper harvest. Feng Jiangqing planted more than 20 mu of cotton fields, and the yield of cotton reached six hundred or seven hundred jin, the highest yield in nearly five years. Just a few months ago, Feng Jiangqing and members of the community looked forward to the idea of "a good harvest this year". But who thinks cotton prices will slide all the way down to the bottom.

In Feng Jiangqing's memory, in 2009, in the speculative tide of hoarding cotton and buying low and high throwing, the purchase price of cotton could reach up to 7 yuan per catty. Since then, the state has established a cotton purchase and storage system, and the purchase price of cotton has been stabilized at more than 4 yuan. In 2014, the state abolished the system and the cotton price was determined by the market. Due to the large increase in cotton production this year, the purchase price of cotton in Dezhou has dropped to 3.1 yuan / Jin.

Since 2011, the government has begun to implement the temporary cotton purchase and storage system in order to stabilize the cotton production, operators and cotton enterprises' market expectations, protect the interests of cotton farmers and ensure market supply. Under this system, cotton processing enterprises almost lie in the amount of money, without any risk, just according to the cotton purchase and storage price stipulated by the state (last year's national cotton price is 4.7 yuan / Jin), pushing down the price of seed cotton, leaving a little profit to cotton farmers. Although the profits of cotton enterprises and cotton growers are not high, the market is basically stable.

　　 Dezhou City Ma Junkai, vice president of the cotton association, pointed out that the cotton temporary purchase and storage system has protected the interests of cotton farmers and cotton purchasing enterprises, but it has hurt the interests of textile enterprises and brought heavy burden to the government.

Originally, under the intervention of this system, cotton price has always been maintained at a higher level. In 2013, the national temporary purchase and storage price was 20400 yuan / ton per ton, and the price of imported cotton was only 16000 yuan / ton, and the domestic cotton price was about four thousand or five thousand yuan higher than the imported cotton price. The cotton prices in the upper reaches remain high, the prices of downstream veils and textile enterprises continue to rise, and the cotton textile industry has no international competitiveness and has been in a predicament of losses. Even some textile enterprises are trying to develop some new materials to reduce the content of pure cotton in their products.

At the same time, the government suffered heavy financial burden because of its collection and storage. Data show that in 2012 and 2013, the total storage capacity reached 6 million 620 thousand tons and 6 million 580 thousand tons, accounting for 90% and 95% of the year's output respectively. At present, the stock of national cotton reserves exceeds 8 million tons, occupying about 160 billion yuan of national funds, and the annual loss of capital interest and warehousing, and the loss of high and low cost of national cotton storage will be about 30 billion yuan. This has also enabled the government to strengthen its determination to reform the cotton purchasing and storage system.

　　 however After the price of cotton was determined by the market, the price of the textile industry began to pick up, and the cotton farmers sitting on the seesaw were in a predicament. Feng Jiangqing counted off his fingers and calculated that only 600 yuan per mu and 3.1 yuan per catty, the cotton growers earned only 1860 yuan for planting an acre of cotton. This year cotton growers cost about 550 yuan for planting an acre of cotton, pesticide, fertilizer, water and electricity, and more than 20 labor per mu of cotton. According to the daily wage of 50 yuan per person, the labor cost can reach more than 1000 yuan. In this way, the profit of farmers planting cotton per mu is only more than 200 yuan, far less than grain.

Ma Junkai, vice president of Dezhou Cotton Association, pointed out that if the manpower input of cotton farmers themselves and their families were included, the cotton farmers' input and output could be flat when the cotton purchase price reached 3.4 yuan / Jin in the market. Today, cotton price 3.1 yuan / Jin means cotton farmers have been in a loss.

What worries cotton farmers is that after the reform of the cotton purchase and marketing system, the government will not bail out the market again, and cotton prices will suffer a historic decline.

　　 Subsidy geometry?

At this time, it was the peak season for cotton purchase and sale and the busiest time in cotton area. Countless Cotton Traders shouted shouting the cotton pick up the streets, smiling at the door and opening the scales to gather cotton. But now the village is cold and cool, and the occasional cotton traders are not happy.

Feng Jiangqing said that cooperative members are generally reluctant to sell unless they are in urgent need of money and few are willing to sell at low prices. Feng's more than 20 mu of cotton is also not sold for a catty, all stored in the storehouse.

{page_break}

In the declining market, cotton growers are reluctant to sell, and cotton merchants also cherish the purchase. In April 2014, the purchase price of cotton in Dezhou was 17 thousand yuan / ton. In August, it fell to 16 thousand yuan / ton, and the market price is only 14 thousand and 600 yuan / ton now.

Wang Xiuqing, general manager of Hou Feng cotton industry company in Wucheng County, Dezhou, complained that cotton prices continued to go down. If there were no downstream merchants, the number of enterprises would be lost. Even if there was an order, cotton farmers would not want to sell, and the delivery time was greatly extended. At present, the thick cotton industry buys about one hundred thousand pounds a day, only three or four of the total purchases in the same period in previous years, and more cotton enterprises simply stop working.

There is another important reason why the whole cotton purchase and sale chain in Dezhou is almost stagnant.

In 2014, the implementation of the temporary cotton purchase and storage system for three years ended. Instead, it was the pilot of the national cotton price target reform in Xinjiang. In Xinjiang, the government determined that the target price of cotton will be 19800 yuan per ton this year. The difference between the actual price and target price of cotton farmers will be subsidized by the government to protect the interests of producers. The new cotton purchase mechanism avoids the market price being artificially intervened, taking into account the interests of upstream cotton farmers and downstream textile enterprises. At the same time, the government hopes that it will no longer have to buy and sell underwriting to alleviate the pressure of funds.

In September 22nd, the national development and Reform Commission held a news conference on "cotton target price reform pilot and market regulation". It clearly stated: "in addition to the pilot area in Xinjiang, there are also the main producing areas of the Yangtze River and the Yellow River River Basin, and the state will also give proper subsidies. Now this principle has been set." "So far, the government's commitment to subsidy policy has not been clear how much subsidy is it? What is the subsidy? Direct subsidy cotton farmers or supply cotton enterprises? What is the basis for obtaining subsidies? Cotton growers are generally worried that if they sell a lot of cotton now, if they can not get the government subsidies, what should they do?" Feng Jiangqing, chairman of the Bank of Tianjin cotton cooperatives, said that before the government gave a clear subsidy policy, the depression of the cotton market could not be alleviated.

Seeing that cotton prices have been falling all the way, we can see no end. The state subsidy policy has not been released yet. According to Feng Jiangqing's rough statistics, more than 20 of the nearly forty members of the cooperative have replanted wheat. This year, 1800 mu of cotton fields in the village only grow four hundred or five hundred mu, and the cotton field of Feng family has twenty mu of cotton fields. Feng Jiangqing reluctantly said that if the cotton planting area continues to decrease, the operation of cotton cooperatives in the future will also be difficult to sustain.

After the old system of storage and purchase has been abandoned and the new cotton price reform mechanism has not yet been formed, the cotton association of Dezhou has submitted an early warning report to the China Cotton Association and government departments entitled "the early warning of the cotton growing areas in the mainland" when it foresees a significant reduction in cotton planting area next year and is likely to endanger industrial safety. Among them, many farmers have been pulling cotton seeds, and the cotton area in Dezhou is expected to decline sharply next year. In order to stabilize the cotton area in the mainland and ensure the healthy development of the industry, it is recommended to make clear the specific policy of Cotton Subsidy in the mainland as soon as possible.

However, subsidy The determination of policy is a test to the administrative ability of the government. The adjustment of the national cotton policy has made Dezhou a traditional cotton growing area. In 1984, the cotton planting area in Dezhou reached the peak of 3 million 400 thousand mu in history and 2 million 900 thousand mu in 2008. Although the government has made clear that cotton prices are determined by the market, cotton prices have fallen sharply and unexpectedly. The embarrassing situation faced by the government is that subsidies are scarce and difficult to work. Cotton farmers will still lose money and industry turbulence will increase.

Now, the subsidy policy has missed the cotton growing season. According to the statistics of Dezhou Cotton Association, because cotton farmers have abandoned seeds, next year, Dezhou cotton planting area will fall from 680 thousand mu this year to 400 thousand mu, a drop of 40%.