“The target price of cotton will be fixed for three years, and it will be 18,600 yuan/ton from 2017 to 2019. At the same time, the subsidy area will be subject to upper limit management.” This has become a hot topic in the domestic cotton market.
During the busy season of spring plowing, when land is being prepared for cotton cultivation, and when cotton price fluctuations intensify, relevant agencies promptly announced Xinjiang’s policy on deepening the cotton target price reform, which was well received by the market. Cotton farmers, cotton traders, ginners, textile companies, and garment companies Waiting for the excitement, the market took a “reassurance”.
On the 17th, the National Development and Reform Commission issued a document stating that in order to implement the spirit of the 2017 Central Document No. 1, with the approval of the State Council, the cotton target price reform will be deepened in Xinjiang starting from 2017. The cotton target price during the pilot period was changed from one year to three years. The target price of Xinjiang cotton from 2017 to 2019 is 18,600 yuan per ton. The National Development and Reform Commission will carry out monitoring and evaluation with relevant departments and regions to improve the target price policy in a timely manner.
It is understood that from 2014 to 2016, the state launched a three-year cotton target price reform pilot in Xinjiang. After three years of practice, the cotton target price reform pilot has achieved remarkable results. It has explored a new way for agricultural product prices to be determined by market supply and demand and decoupled from government subsidies. It has achieved strategic adjustments to the national cotton production layout and promoted cotton production and processing. The development of the entire industry chain of , circulation and textile has improved the quality and market competitiveness of domestic cotton, and provided practical experience for the structural reform of the agricultural supply side.
From the background of deepening the cotton target price reform, in 2014, in accordance with the decisions and arrangements of the Party Central Committee and the State Council, the National Development and Reform Commission and the Ministry of Finance, together with relevant departments, launched a three-year cotton target price reform pilot in Xinjiang to explore and promote the formation mechanism of agricultural product prices. Ways to decouple from government subsidies. At present, the pilot has ended. The National Development and Reform Commission and the Ministry of Finance have made a comprehensive summary of the pilot situation and entrusted relevant institutions to conduct a third-party independent evaluation. On this basis, they have put forward opinions on deepening the cotton target price reform. In accordance with the spirit of the 2017 Central Committee Document No. 1 on “Adjusting and improving Xinjiang’s cotton target price policy and improving subsidy methods”, with the approval of the State Council, we will deepen the cotton target price reform in Xinjiang from 2017 and further improve the target price policy.
For the cotton textile industry, the price of cotton has always been a key issue for future development. In 2016, the price of raw materials in the cotton textile industry was in the process of rising, and the sales of inventory and finished products have also been in a process of value-added. But the situation in the cotton textile industry will change in 2017. First of all, the decline in commodity raw material prices and the relatively loose global financial environment will promote the expansion of demand, and cotton textile products are no exception. This is good news for my country’s textile companies.
In 2017, the country will gradually and orderly digest the national cotton reserve inventory and adjust the reserve scale to a reasonable level. The digestion of national reserve cotton is mainly operated according to the method of “asymmetric rotation, first rotation out and then in rotation, more rotation out and less rotation in”.
“Every time raw material prices rise, the market situation improves. This appearance is actually a real appearance.” If the national cotton auction price gets higher and higher, be careful of the cotton market “shearing”. Cotton spinning enterprises must be wary of the risk of post-cost costs, because post-cost costs accumulate risks in industry operations. Historical experience has proven that at this stage, under the established domestic and international cotton supply and price system, long-term high cotton prices are unreasonable and cannot withstand the test of time.
But the “last hit” of high cotton prices is often taken by most cotton textile companies. Of course, sometimes many cotton merchants are injured. If 2 million tons of cotton in various corporate and commercial inventories are affected (assuming), and cotton prices fluctuate by 4,000 yuan, 8 billion yuan in profits will evaporate. This cost-postponed impact will bring great harm to the healthy development of the industry.
To sum up, deepening the cotton target price reform is a happy thing for the cotton textile industry. Cotton price fluctuations have always been a big risk for textile companies. In order to avoid and reduce risks, the target price is undoubtedly A “life-saving straw” for the current unsettled cotton market.
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