Xinjiang deepens cotton target price reform Experts: Development prospects are promising

In order to form a healthy and stable cotton target price mechanism, in 2014, the state launched a three-year cotton target price reform pilot in Xinjiang to explore ways to decouple the agricultural product price formation mechanism from government subsidies. As of this year, the three-year plan has been completed. Were the trials in the first three years successful? What valuable experience has it left for the next deepening of reforms? Researcher Du Min, an expert from the Cotton Expert Advisory Group of the Ministry of Agriculture, believes:

Du Min: The cotton target price reform is successful. This is a success point. Under the national macro-control, relying on market mechanisms to achieve rational allocation of cotton resources, prices return to the market, and the price gap with international prices gradually narrows, so that the industrial chain can be in line with international standards and develop healthily and stably. The second success point is to protect the basic income of Xinjiang cotton farmers. Judging from the production in Xinjiang in recent years, farmers continue to grow cotton. Third, the quality of cotton has improved significantly. Previously, under the policy of the State Reserve, all cotton was ignored, whether it was good or bad. But now it is different because price and quality are linked. In this way, a good mechanism for stable and coordinated development of the industrial chain is gradually taking shape. Furthermore, the cotton target price also plays a particularly good role in promoting supply-side reforms.

“The Notice” requires that the cotton target price be changed from the previous “one-year certainty” to “three-year certainty”. Why should the price adjustment cycle be lengthened? Researcher Du Min believes that this change is beneficial to both farmers and industry.

Du Min: It is necessary to change the policy from one year to three years. It turns out that if the policy changes every year, farmers will have no idea about their expectations for the policy. Second, the price is set at 18,600 yuan for the next three years, which not only takes into account farmers’ cost benefits, but also circumvents WTO restrictions on us. The WTO stipulates that my country’s support has a minimum limit of 8.5%, which cannot be exceeded too much. If it exceeds it, it will be restricted by the basic framework of the WTO at any time. Calculated in this way, based on the operating conditions of cotton in recent years, we believe that it can still be controlled within a reasonable range. This is also a remarkable policy that promotes industrial development.

Xinjiang’s cotton output accounts for more than 50% of the country’s total output, and half of the farmers in Xinjiang are growing cotton. Therefore, this target price should be said to not only affect the livelihood of cotton farmers, but also the trend of cotton and the entire industry chain.

Researcher Du Min emphasized that after the cotton price change, the development prospects of cotton are even more promising after this adjustment.

Du Min: I think this price is a good thing for farmers, at least there is such a guarantee. Farmers who have been producing cotton for a long time must steadily develop cotton production. Because in Xinjiang, cotton production is difficult to replace by other industries. Other countries love cotton from beginning to end. No matter what, there are people who want the seeds, which is particularly important. In addition, in recent years, the country has also vigorously supported the development of fabric enterprises, so cotton is the market’s choice in Xinjiang and the choice of Xinjiang people in the development of market economy. Cotton planting should continue in areas suitable for cotton.

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