Additional support measures being developed to stabilize market

According to Xiamen conference, some additional measures are being developed to better implement the target price based cotton subsidy program.

  1. A supportive reserve purchase that encourages diversified bodies to participate in reserve procurement when growers have trouble in selling and price falls too fast.
  2. Greater support to Xinjiang’s textile industry.
  3. Moderate subsidy for inland growers
  4. Strengthen market monitoring to ensure a smooth implementation of the new subsidy program.

 

 

 

CNCRC to improve reserve service

  1. While the old procurement program is replaced by a target-price based subsidy, CNCRC maintains its role in macro control. To that end, CNCRC will improve reserve service to meet the demand of textile mills. All reserve supplies, imported, Xinjiang and inland reserves will be allocated in a more appropriate way.
  2. Looking ahead, both Chinese and world price are trending lower. CNCRC will make full preparation for any difficulties during seed cotton procurement.

 

 


NDRC---- The direction of cotton market control

At the 2014 China Cotton Industry Summit, NDRC spokesperson noted while talking about the target price reform implemented in 2014 that the regulatory approach and measures will be undertaken by taking into account the significant changes to government policy and by two stages, i.e., short term and long term. 

Near term, consideration will be given to the coordination between temporary stocking and target price policy and persistent, especially to market regulation, with focus on the regulation after the failure of market mechanism. The regulatory measures include destocking of cotton reserves as soon as practical and at an appropriate pace while in conjunction with import regulation, as well as regulatory measures that the government might take when significant market fluctuations occur in the process of coordination, especially when a large number of cotton growers have difficulties selling cotton. He mentioned the possibility of encouraging companies with strong processing, warehousing and financial capabilities to participate in procurement of cotton.  

Longer term, the role of cotton production as the main source of income for farmers in Xinjiang will not change; neither will the roles of cotton as the basic raw material for textile production or the role of textile industry as an important part of national economy. It is therefore necessary to ensure security of cotton production through self sufficiency and to improve the market regulation policy according to the government policy. 

 


Future regulation should follow three principles

  1. Marketization, i.e., exploring the possibility of and implementing the decoupling of market price formation mechanism from government and establishing a target price policy.
  2. Comprehensiveness. The experiences and lessons suggest that a single policy that served many policy objectives has led to reduced effectiveness and efficiency of regulation. Therefore it is necessary to refine the agricultural product regulation policies, take various measures, and to establish a scientifically reasonable scale and function of cotton reserves that allows for the expanded range of market fluctuation while implementing the basic regulation over cotton reserves and import. More market-driven tools will be explored in support of regulation and a multilevel regulatory system will be established to improve the effectiveness and efficiency of regulation and refine the agricultural product regulation policies in a more targeted manner.
  3. Leveraging the role of market participants. Market interventions need to be phased out over time and the roles of market participants and local governments in regulation will be called into greater play in the future policy design for improved efficiency of regulation.

 

 


Cotton industry regulation is intended to support the national economic development and many more tools and regulatory measures should be implemented step by step according to the principles defined by the central government for more effective regulation and continuous improvement, expecting industry practitioners to provide constructive and actionable ideas and suggestions in support of the sustainability of cotton market.

 

 

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