What Are The Problems Of Cotton Target Price Subsidy Pilot Policy?

The pilot policy has been implemented for more than two years and achieved good results.

The price mechanism of the market was basically established, the market consciousness of the main market was enhanced obviously, the interests of farmers were protected to a certain extent, and the efficiency of financial subsidy was improved.

Considering that cotton target price subsidy pilot policy has better effect, higher market main body satisfaction, local government's policy recognition, Xinjiang special regional conditions and other factors, it is recommended to continue to implement cotton target price subsidy policy in Xinjiang area.

The existing problems need to be solved gradually by adjusting the target price pricing mechanism and improving the subsidy scheme.

First, the price mechanism of market formation is basically established.

Since the implementation of the target price subsidy pilot policy, domestic cotton prices have fallen rapidly, domestic and foreign price linkage has been further enhanced, domestic and foreign cotton spreads have narrowed rapidly, internal and external spreads have returned to a reasonable interval, industrial competitiveness has been improved, and cotton imports have dropped significantly.

In May 2014 -2016, March, under the 1% tariff, the import cotton price index M grade (equivalent to domestic 3128B grade cotton) decreased from 3236 yuan to 809 yuan per ton and 75%.

Market players have been able to adapt to the market, and the market forced mechanism has been gradually formed. Market participants such as cotton growers and processing enterprises have actively captured and understood market signals and begun adapting and adjusting.

In addition, the public inspection system implemented in line with cotton target price reform has blocked the loopholes in cotton quality management, improved the market environment, standardized the market order, and thoroughly solved the long-standing problems of cotton production in Xinjiang for many years.

Two, farmers' interests are protected to a certain extent.

Since the implementation of the target price in 2014, due to the weak global and domestic economic growth, insufficient supply of cotton and insufficient domestic and foreign cotton prices, cotton farmers' cotton sales have declined significantly.

However, because of state subsidies, the market losses of cotton growers have been well compensated.

2014, in 2015, Xinjiang cotton farmers (locality) received an average subsidy of about 444 yuan and 497.5 yuan per mu, plus the target price subsidy for Xinjiang farmers. The net profit of cotton planting per mu was 164.4 yuan and 89.5 yuan (cash income was 581.4 yuan and 509.5 yuan respectively). Cotton prices at home and abroad could be achieved at a time of continuous downturn.

The three is to improve the efficiency of subsidies and reduce the loss of social welfare.

Compared to temporary

The target price subsidy policy adjusts the indirect "covert subsidy" to a direct "explicit subsidy", reduces the subsidy link, reduces the subsidy amount, and improves the subsidy efficiency.

As of the end of 2013/14, China's cotton reserves exceeded 12 million tons, accounting for about 200 billion yuan of inventory costs.

According to the current cotton spot price level, considering the natural demoted downgrade, the potential spread loss is about 75 billion yuan.

In addition, we have to pay for storage and loan interest.

According to the storage cost of 200 yuan per ton of cotton reserves per year (the central finance is subsidized by the 200 yuan / ton of the central storage cotton directly under the warehouse, 180 yuan per ton per year), and the 1200 yuan loan interest subsidy is calculated, the annual expenditure on inventory management subsidy is about 16 billion yuan.

After the implementation of the target price, compared with the temporary purchase and storage policy, the savings and interest expenses directly saved by 6 billion 300 million yuan were calculated in the year (according to the actual output of 2014 tons in Xinjiang in, and the interest cost of custody at 1400 yuan per ton per year).

1. the amount of subsidy exceeds that of China's accession to WTO.

According to the WTO rules, the target price subsidy implemented in China is "yellow box subsidy", and its allowance amount is restricted by the micro allowable ceiling.

In accordance with the WTO commitments, the subsidy for yellow varieties of specific varieties in China should not exceed 8.5% of the total output value of the year.

In practice, the subsidy quota for cotton target price subsidy policy has been constrained by the subsidy ceiling for two consecutive years.

If no future measures are taken to avoid it, it may trigger other Member States to question and trigger trade disputes.

2. policy expectations are unstable.

Since the implementation of the pilot policy of cotton target price subsidy in 2014, Xinjiang has done a lot of work. The textile enterprises, processing enterprises, farmers and other market players have basically understood and accepted the target price subsidy policy. They know more about the details of when to replenishment, replenishment, how to make up and supplement, and so on, and the mass base of policy implementation is better.

However, the target price subsidy policy is still a pilot project.

Whether the market will continue to be implemented or whether there will be a big adjustment will be doubtful.

3. the target price setting standards are unidentified and changed too frequently.

According to policy design, the target price level is determined according to the method of "cost plus basic income", which changes one year at the pilot stage.

But from nearly three years of practice, there are two problems: first, the formulation of target prices is more difficult.

In the past three years, the formulation of cotton target price has not been completely determined according to the "production cost plus basic income" designed by the policy, which is ultimately the result of the game between different departments and different stakeholders.

Due to different interests and different demands of different departments and departments, the policy views are inconsistent, and the understanding of industrial development is also different.

Therefore, despite repeated reflection from Xinjiang, we hope to make and publish as early as possible.

Target prices, so that local governments and cotton farmers can make production decisions and preparatory work ahead of time, but because of the problem of decision-making mechanism, the target prices are often difficult to produce, each time in the early April of that year can be finally announced.

Two, the market participants are not sure about the target price level.

In the 2014-2016 year, although the cost of cotton production is growing, the target price of cotton will continue to decline, and whether it will continue to decline or how to change will not be clear in the future.

The effect of fixed subsidy in the mainland is not obvious.

During the pilot period, the nine provinces in the mainland issued quota subsidies in accordance with the cotton planting area.

From the actual implementation, the subsidy effect is poor.

First, in order to simplify the operation, some provinces directly distribute subsidies according to the two round of land contract area or the subsidy area of fine seeds. Farmers can receive subsidies regardless of whether they grow or not.

Two, the subsidy standard is low, so it is difficult to stimulate farmers' enthusiasm for planting cotton.

Compared with Xinjiang, the subsidy standard of cotton farmers in the mainland is only 1/3 of Xinjiang, and the benefit of farmers' cotton planting is low.

Affected by this, the cotton planting area and output in the mainland have declined sharply.

According to the National Bureau of statistics, in 2015, the area and output of cotton in the mainland were 28 million 420 thousand mu and 2 million 103 thousand tons, down 10 million 995 thousand mu and 678 thousand tons respectively, down 27.9% and 24.4% respectively compared with 2013.