The New Round Of Cotton Target Price Policy Focuses On Improving Quality, And "Timely Rain" Nourishes Xinjiang Cotton

At present, cotton has emerged in Xinjiang. The introduction of the target price policy for cotton has given a "reassurance" to cotton farmers who were busy planting cotton some time ago. The specific measures in the policy to ensure the basic income and enthusiasm of cotton farmers are like a "timely rain".

So, what are the key points of the new round of national cotton target price policy that need attention? What is its significance? With the implementation of the target price policy for cotton, what is the cotton planting intention of cotton farmers this year?

　　 Target price unchanged Price management flexibility increased

"Not only Xinjiang cotton farmers, but also cotton practitioners have paid close attention to the new round of national cotton target price policy since this year," said Yao Yu, cotton analyst of Hua'an Futures.

In 2014, the country launched a three-year cotton target price subsidy pilot in Xinjiang, and the annual target price level was adjusted and determined according to the method of "cost+basic income". Since 2017, the country has deepened the reform of cotton target price in Xinjiang. The target price will be fixed for three years, and the price level will be 18600 yuan per ton in 2017-2019. In 2020, the country will clearly maintain the overall stability of the cotton target price policy framework, maintain the overall support, ensure the stability of cotton farmers' income, and realize the normalization and long-term effectiveness of the policy. From 2020, the target price level of cotton in Xinjiang will be 18600 yuan per ton, and a regular evaluation mechanism will be established at the same time, which will be evaluated every three years, and the target price level will be adjusted as appropriate according to the evaluation results.

Therefore, 2023 will be the year when a new round of cotton target price policy is announced. In the market expectation, on April 14, the National Development and Reform Commission and the Ministry of Finance issued the Notice on Measures to Improve the Implementation of the Cotton Target Price Policy (hereinafter referred to as the "Notice"). The Notice made it clear that the target price level should be stabilized. Continue to determine the target price level according to the pricing principle of production cost plus reasonable income, and determine the reasonable income by comprehensively considering the development needs of cotton industry, changes in market situation, financial affordability and other factors. In 2023-2025, the target price level of cotton in Xinjiang will be 18600 yuan per ton. In case of major changes in the cotton market situation, it can be adjusted in time after being reported to the State Council for approval.

"The new round of cotton price policy continues to implement the target price of 18600 yuan/ton, which is the basis for ensuring the stability of China's cotton production, and is within the market expectations. But unlike in previous years, the Notice also made it clear that the target price subsidy level can be adjusted according to the market trend, increasing the flexibility of price management." Li Min, a soft commodity researcher at Huishang Futures Research Institute, said.

As for the target price of 18600 yuan/ton of cotton, Cao Kai, the chief analyst of SDIC Andersen Futures, analyzed that: "Before the announcement of the cotton subsidy price, the market had expected the target price to decline, but the final target price was not adjusted, which should take into account the rising cost of cotton planting in recent years to ensure the income of cotton farmers."

The data provided by Xinjiang Cotton Association confirms the fact that Xinjiang cotton planting costs are rising. According to Wang Zhong, president of Xinjiang Cotton Association, in 2022, the total cotton planting cost of Xinjiang local machine-made cotton on its own land will be 1595 yuan/mu, an increase of 11% year on year; The total cost of renting land for cotton planting by machine picking in Xinjiang was 2755 yuan/mu, an increase of 19.14% year on year; The total cotton planting cost of Xinjiang local hand picked cotton on its own land was 2336 yuan/mu, up 8.5% year on year; The total cotton planting cost of Xinjiang local hand picked cotton rental land was 3496 yuan/mu, up 15.8% year on year.

Wang Zhong said that from the feedback of some Xinjiang cotton processing enterprises and cotton farmers, although since 2023, basic farmers and land parcel operators have called for raising the target price level of Xinjiang cotton from 2023-2025 to 19000 yuan/ton or even 19500 yuan/ton, the target price of 18600 yuan/ton of cotton is also within an acceptable and digestible range. Therefore, some farmers with swaying intentions are likely to return to cotton planting.

　　 Fixed subsidy yield guides high-quality cotton production

Compared with previous policies, this round of policies has added specific implementation measures on price adjustment, output and quality. The measures show that the development trend of cotton planting in Xinjiang is that quality takes precedence over yield.

The Notice proposed that the production should be fixed with subsidies. Taking into account the cotton production in Xinjiang in recent years, as well as the local water resources and cultivated land resources, Xinjiang cotton was subsidized with a fixed output of 5.1 million tons.

The Notice proposes to improve the operation measures. The Xinjiang Uygur Autonomous Region and the Xinjiang Production and Construction Corps should focus on improving quality, further make good use of target price subsidy funds, implement quality subsidies in a wider range, reasonably determine quality subsidy standards, and use "high-quality subsidies" to guide high-quality cotton production; Take effective measures to actively and orderly promote the withdrawal of secondary suitable cotton areas and promote the concentration of cotton planting to production protection areas; Promote the construction of a unified cotton market in Xinjiang, comprehensively promote the mutual recognition of seed cotton sales, and accelerate the integration of military and local cotton markets and the convergence of subsidy standards; Continue to implement the system of "professional warehousing supervision+in warehouse notarization and inspection", and arrange relevant measures to ensure the smooth operation of relevant mechanisms when the market price is higher than the target price; Carry out insurance pilot projects according to local conditions.

"Subsidizing the fixed output of 5.1 million tons, actively and orderly promoting the withdrawal of sub suitable cotton areas, promoting the concentration of cotton planting to production reserves and other measures, reflect that the country is promoting Xinjiang cotton planting to become more and more 'quality', and the cotton planting area may be reduced in the long run." Li Min said that sub suitable cotton areas are restricted by irrigation water, farmland fertility and other constraints, lint quality Color levels are also biased, and farmers have great difficulty in obtaining quality traceability subsidies. The implementation of quality subsidies on a larger scale may benefit the production areas of high-quality cotton and long staple cotton, and further promote the withdrawal of sub optimal cotton areas. With the withdrawal of sub suitable cotton areas, the cotton planting area in Xinjiang may further decline, making the annual cotton output in Xinjiang stable at about 5.1 million tons.

"Judging from the inspection volume of cotton in the past three years, the inspection volume of Xinjiang cotton in 2020-2022 will be 5.77 million tons, 5.31 million tons and 6.13 million tons respectively, and the subsidy of only 5.1 million tons in 2023-2025 may lead to the reduction of cotton supply in 2024 and 2025, or will benefit cotton prices." Wang Zhong said that as of April 27, the inspection volume of Xinjiang cotton in this year had reached 6.1618 million tons, The output exceeded the fixed cotton subsidy of 1 million tons, and the state gradually guided Xinjiang to reduce the cotton planting area and output. 2022-2025 or the transition period of cotton target price policy from "comprehensive subsidy" to "quality subsidy" will finally realize 100% quality traceability subsidy. While stimulating and promoting farmers to improve management and planting level, it can meet the needs of industrial upgrading of domestic cotton textile enterprises, and achieve the goal of improving product quality, improving product profits, and improving product export competitiveness.

　　 Cotton planting is shrinking year by year, and the cotton industry in the mainland needs urgent attention

Before the target price policy of Xinjiang cotton was implemented, the China Cotton Association conducted a survey on cotton planting intentions in 2023 in March. The survey results show that the intended area of cotton planting in 2023 will be 41.5575 million mu, down 7.4% year on year. Among them, the area of cotton planting intention in Xinjiang decreased by 4.3% year on year; The area of cotton planting intention in the Yellow River basin and the Yangtze River basin decreased by 22.6% and 32.2% year on year.

In sharp contrast to the stable cotton planting area in Xinjiang, the cotton planting area in the mainland has declined year after year. Why? Lu Chunheng, deputy general manager of Guoxin Rural Technical Service Association in Hejian City, Hebei Province, made an analysis.

"From the perspective of seed sales market, the cotton planting area will generally decline in 2023, and the decline in the mainland will be greater than that in Xinjiang. The cotton planting area in the Yangtze River basin and the Yellow River basin will decline significantly, which is mainly caused by poor cotton planting efficiency." Lu Chunheng said that in the Yangtze River basin and the Yellow River basin, cotton has no ability to compete with corn, wheat The competition of soybean and other crops lacks competitive advantages in terms of cultivation technology, mechanization, economic benefits, industrial chain integrity, national policies, etc.

Lu Chunheng appealed that the cotton planting subsidies in the Yangtze River basin and the Yellow River basin should be equal to those in Xinjiang: "In terms of specific implementation, we can increase the subsidies and accuracy in key cotton planting counties and large cotton planting households, and also increase the policy support for processing and purchasing business in key cotton planting counties, so as to maintain the integrity of the industrial chain and enable cotton farmers to grow well and sell well."

Yang Xiong, president of Hubei Cotton Association and chairman of Hubei Yinfeng Industrial Group Co., Ltd., also agreed with the proposal to support the recovery of the cotton industry in the mainland. Yang Xiong believes that the core problem of cotton production in the Yangtze River basin and the Yellow River basin is that the subsidy mechanism is not consistent with Xinjiang. In addition to the subsidy policy factors, the low degree of mechanization and insufficient economic benefits also led to the decline of cotton planting area in the mainland.

"If these three main problems cannot be solved, it is expected that cotton planting in some provinces will disappear." Yang Xiong said that Hubei Yinfeng Industrial Group Co., Ltd. is exploring small and refined products and cooperating with Hubei Academy of Agricultural Sciences to do the whole process of machine picking cotton test demonstration. This year, it will be promoted to 2000 mu to create cotton picking products without three silk machines.

(Written by China Textile News/reporter Wei Shiwen)