Adjusting the Cotton Industry Structure with Invisible Hands

The payment of cotton subsidies in 2014/2015 has not yet been fully completed. The cotton target price for the new year is already under development. At present, Xinjiang has initiated the evaluation of the 2014 target price reform pilot, summed up experience and deficiencies, and intends to optimize the implementation plan.

Gao Fang, executive vice president of the Cotton Association of China and director of the cotton and linen bureau of the National Supply and Marketing Cooperatives, suggested that in the new year's financial subsidies, he hopes to improve the subsidy method and increase its scientificity, accuracy, and effectiveness.

Liu Weidong, Director of Agricultural Products and Water Resources Price Division of Xinjiang Development and Reform Commission, participated in the formulation of the pilot program for cotton target price reform. He said that after one year of implementation, the implementation effect and existing deficiencies of the policy have been relatively clear. Regional cotton cultivation in Xinjiang is scattered, with small plots and low degree of information. In the reform, farmers' adaptation of policies takes time, and Xinjiang's cotton processing capacity has far exceeded cotton's production capacity. The reform work will inevitably make this part of the processing industry. Reintegrate, adjust, and even eliminate.

He proposed that, in the design of the cotton target price reform implementation plan, the advancement of the project of retreating land for water reduction in Xinjiang should be fully considered. According to the development of Xinjiang, on the premise of improving quality and efficiency, some risky cotton areas in Xinjiang will be gradually withdrawn from cotton cultivation and production.

Liu Weidong stated that the formulation of the cotton policy in the new year will focus on optimizing the procedures for area declaration and subsidy, simplifying the simplification as much as possible, requiring more rigorous supervision and supervision, improving the efficiency of subsidy payment, and exploring the mechanisms for pre-disbursing funds. Cases in the reform pilots, such as virtual invoices, circular cotton, and non-banking public inspections, were studied and solutions proposed. Gao Fang said that he hopes that the cotton policy will be guided by financial subsidies, link the subsidies with cotton production and intrinsic quality, and use market-oriented means to adjust the industrial structure of cotton so as to guide the continuous improvement of cotton quality.

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In the textile industry, cotton is more concerned as an industrial raw material, but cotton, like corn and soybeans, belongs to agricultural products. The implementation of the direct subsidies policy is the reform of the price mechanism of agricultural products including them, and it may be easier to conclude from the perspective of agriculture. Its development trend. Cheng Guoqiang, secretary-general of the Academic Committee of the Development Research Center of the State Council, said: “At present, the price formation mechanism for agricultural products is at a difficult stage of selection. Some scholars and some leaders of policy-making departments’ attitudes toward reforms were firm and optimistic from the beginning of 2014. It gradually became somewhat hesitant or even withdrawn. My point is that the price formation mechanism for agricultural products must adhere to the reform of the cotton price formation mechanism and there is no retreat."

Why is Cheng Guoqiang so determined? Statistics show that in the past 10 years, the total cost of planting cotton in China has risen by 148%, which is the fastest increase among all agricultural products except for sugar. Among them, artificial rise has contributed the most, accounting for 74%. According to Cheng Guoqiang, under the new normal state, China's agricultural products have entered a critical period of institutional innovation and restructuring. How to innovate agricultural management methods, eliminate the existing small-scale, one-to-one business structure, and promote the improvement of quality, efficiency, cost savings become a key issue. Moreover, for the cotton industry as a whole, market-oriented reform is the only way out for the entire cotton industry. If there is a vacillation in the current critical period, especially if the policy is implemented in a different way, the consequences will be disastrous.

After the determination of the general direction is the formulation of the details of the policy, Cheng Guoqiang said that at present, the entire world sees in the experience of agricultural policy, and there are generally two paths to support agriculture. One is to subsidize producers, to ensure the supply of certain kinds of agricultural products; the other is to support the entire agriculture, including the promotion of science and technology, environmental improvement, technological innovation, etc., and does not directly play a role for producers.

No matter which kind of policy logic you choose, you cannot delay these two frameworks. Cheng Guoqiang said that at present, China’s subsidy for cotton exceeds the ceiling of prices, especially the cotton purchase and storage policy, and the state has invested a lot of financial support. In order to get rid of the dilemma of high subsidies, it is the only way to persist in the reform of the price formation mechanism and to insist on unfettered marketization.