What is the way out of China's cotton industry?

On June 6, 2013 China International Cotton Conference was grandly opened in the beautiful coastal city of Qingdao. Nearly 1,000 experts, scholars, government officials, and cotton textiles from 17 countries and regions conducted in-depth exchanges on current agricultural trade, macroeconomic policies, cotton and textiles, and jointly planned the future development of cotton in China and the world. .

What's wrong with cotton?

China's cotton market continues to be sluggish. This is an uncontested factual judgment. At the meeting, the China Cotton Association released relevant statistical results. Due to the increasing uncertainty in the cotton industry due to the uncertainty of textile demand and the significant increase in the cost of cotton planting in recent years, the enthusiasm for planting cotton farmers has declined. In 2013, China's cotton planting area will decline by 6.7% year-on-year, and cotton production will continue to shrink. The domestic cotton industry's production situation is facing challenges.

According to Luo Lin, deputy director of the All-China Federation of Supply and Marketing Cooperatives, “In recent years, due to the impact of the international financial crisis, world economic growth has continued to be sluggish. Demand from major economies has fallen short. Global trade in textiles and clothing has dropped significantly, and international cotton prices have declined significantly. As a big country in cotton production and consumption, as well as a major exporter of textiles and garments, China has suffered a relatively large impact, and all parties in the industry chain have been under greater pressure." In his view, although the area of ​​cotton planting in the world's major producing countries has decreased, The situation of oversupply has improved, and China's textile and apparel exports have also experienced a recovery. However, the under-required environment has not changed. Constraints such as the appreciation of exchange rates, rising labor costs, and the difficulties faced by SMEs still exist. If the cotton market continues to slump, the sustainable development of the entire cotton textile industry will face severe challenges.

Zhou Shengtao, president of the China Cotton Association, also believes that since 2012, the Chinese textile industry has experienced unprecedented difficulties due to lack of demand, rising costs, and internal and external cotton prices.

"Resumption policy" to brake?

On April 12th, the website of the National Development and Reform Commission issued an announcement to protect the interests of cotton farmers and protect the market supply in order to stabilize the cotton production, business operators, and cotton business market. National Development and Reform Commission, Ministry of Finance, Ministry of Agriculture, Ministry of Industry and Information Technology, and the State The General Administration of Quality Supervision, Inspection and Quarantine, the Supply and Marketing Cooperative and the Agricultural Development Bank of China have formulated the “2013 Preliminary Interim Storage and Storage of Cotton”, which has been approved by the State Council. Representatives of various parties generally believe that the cotton issue has not only affected the healthy development of the textile industry, but has become a top priority for the safety of the cotton industry chain. However, when it comes to the government's policy of purchasing and storing, opinions are not the same.

Zhu Beina, president of the China Cotton Textile Industry Association, believes that as a cotton textile company, its products are now marketed and sales are all based on the market, but when it comes to buying raw materials, especially cotton is still dependent on the government. If we look at the law of economic development, I think both ends should be markets, so that it is in line with the laws of economic development. Ding Haowu, general manager of the National Cotton Trade Market, believes that the policy of summarization of storage and storage sums up what I call "a satisfied and three dissatisfied." “One satisfaction” means that the cotton farmers are basically satisfied. Through the temporary purchase and storage policies, the prices are stable, so the enthusiasm of cotton farmers for cotton cultivation is basically stable. "Three dissatisfied" or "not very satisfied": First, circulation, there is nothing else to do other than engaging in storage or importing cotton. The second is textiles, especially cotton textiles, where the spread exceeds its affordability. It is very difficult for the cotton textile industry to absorb this kind of cost when the difference reaches 45,000 yuan or even 56,000 yuan. The third is finance. Nowadays, such a huge reserve of cotton reserves is simply a single account. The potential loss of national finance exceeds 20 billion yuan each year. Shi Jinkai, chairman of China Cotton Group Co., Ltd., said: Three objective facts still need everyone to know. The first is that the policy of cotton collection and storage has been implemented until now, and its positive effect on our cotton industry in China must be affirmed and clarified. The second is any policy, its introduction, its maturity, and its perfection must have a process. To a certain extent, it may have to pay a certain price. Third, the problems existing in the temporary collection and storage policy now are due to the fragmentation and separation of the international market and the domestic two markets. This is one of the most important or most prominent problems caused by our current policies.

At the same time, policies themselves are not very effective in playing a market role. Moreover, macro-control also has to play a role in the market. The two cannot be opposed to each other. As for the government, macroeconomic regulation and control are also good. We must pay attention to the role of the market. Du Fu, from the Rural Economic Research Center of the Ministry of Agriculture, believes: “The starting point of this policy is to be very good, and it is also operational in terms of operation. However, this policy is not economical and its operating costs are too high. Here, I think it can be braked." She said, should take precautions, any policy can not temporarily hold its feet, and now our policy should consider how the future should go. Braking is a problem. How to get there in the future is a more important issue.

Gao Fang, the director of the cotton and linen bureau of the All-China Federation of Supply and Marketing Cooperatives and executive vice president and secretary general of the China Cotton Association, bluntly stated: “This policy is implemented to such an extent that it is like a person’s advantages are prolonged excessively and will become disadvantages. The problem has indeed been exposed. Then everyone's understanding is the same, that is, how can we find a better policy for China." Liu Xiaonan, deputy director of the Department of Economic Affairs of the National Development and Reform Commission pointed out: We believe that the evolution of the policy is a very natural thing. Nothing is strange. The basic starting point of the policy has been reached, but it cannot be denied that any policy has its limitations. For example, we now have temporary storage and storage policies. We all think that we have brought great pressures on storage and storage, management pressures, and we have weakened the role of market mechanisms and market regulation. The acceptance of the international and domestic cotton market price barriers is a certain obstacle. I think this is also very objective. How to do? Many opinions have been put forward on all aspects of these issues. Whether it is our industry associations, our textile companies, or our operating companies, we have many opinions. What I want to tell you is that we attach great importance to these opinions.

Cotton inventory has hidden concerns?

As of March 31 this year, the 2012 cotton interim storage ended, accumulatively storing 6.5 million tons of cotton, of which Xinjiang cotton accounted for 65%. At the same time, the Chinese government has increased cotton imports in response to the excessive domestic and foreign cotton price gaps. In 2012, China imported 5.14 million tons of cotton. On the other hand, in order to ensure that textile companies use cotton, the Chinese government has targeted cotton textile companies since January of this year. As of May 27, the accumulated cotton reserves have reached 1.82 million tons. Shi Jinkai does not have to worry: “We are doing business. Any company has to consider normal inventory levels, and we also feel that when the country considers reserves, even if the country is viewed as a large company, it should also consider a reasonable inventory level problem. In other words, our country’s reserve level is the best and most reasonable at what level. It can both protect and regulate the demand for supply and demand without affecting or distorting the market price. This has to take into account our inventory level. He believes that if the number of tens of thousands of tons is not affected by the financial crisis in the next few years, without considering the current decline in demand, 900,000 tons will be more than 2 million tons in 3 months, and will not exceed 3 million tons, which is the normal national reserve level. However, since the special period of the financial crisis, the state has introduced a policy of purchasing and requisitioning reserves. We have now received astronomical figures, which is a large amount. Regardless of which aspect is considered, I personally think that it is abnormal and unreasonable.

Increase cotton planting subsidies?

The impact of the temporary cotton purchasing and storage policy has caused concern in various aspects of the cotton industry chain. So what kind of policies can solve the current cotton problem? According to industry insiders, the long-term serious downside of cotton prices at home and abroad will eventually jeopardize the interests of cotton farmers. It is suggested that China's cotton purchasing and storage policies be adjusted and direct compensation be provided to cotton farmers to ensure the enthusiasm for planting cotton. In fact, during this year's ** period, several members of the National Committee of the Chinese People's Political Consultative Conference, such as Qi Zhiliang, Wang Shuli, and Liu Dazhao, jointly submitted the “Proposal on Increasing the Temporary Purchase and Storage Prices of Cotton and the Perfection of the Subsidy Policy for Cotton Planting,” and suggested that the country continue to implement the cotton collection and storage policy as soon as possible. Before the new cotton was planted, the price of temporary cotton storage and storage was increased to mobilize the enthusiasm of cotton farmers for cotton planting. With reference to the food direct subsidies policy, we will establish a direct cotton compensation mechanism as soon as possible. According to the subsidy of not less than RMB 100/mu, a direct subsidy will be given to the cotton farmers to stabilize the cotton planting area and maintain the domestic cotton self-supply rate.

Wang Dingwei, Secretary-General of the Cotton Association of China Cotton Association, focused on this issue. He said: “From the point of view of cotton farmers' production, I feel that cotton farmers are now entering the ice age and are not so optimistic. Despite this policy support, everyone saw us. The area is still further declining. If there is no such policy, then a substantial decline in area will be inevitable.” He suggested that the country can make great efforts, spend a large amount of money, can be sold at a reasonable price. He also said from the perspective of production, the state can consider the direct supplementation of cotton farmers. Grain subsidies are now doing very well, and the extent of this is more direct than cotton. In the face of this situation, the state should at least be able to equalize the subsidies for cotton with grain subsidies, and even exceed it by three times. Times, I do not think it is enough to support the enthusiasm of cotton farmers. If the subsidy is not strong, it is conceivable that the cotton in the Mainland will decline drastically, and that Xinjiang, including Xinjiang, will not be able to maintain a stable area.

In fact, on the issue of direct subsidies for cotton farmers, the experience of direct subsidies for cotton farmers implemented in the United States is worth mentioning. For a long time, the U.S. government has adopted various forms of subsidies for its domestic cotton farmers, including production subsidies, sales subsidies, and export subsidies that have been used but have been cancelled. However, Gao Fang believes that “any country’s way of moving to China is inapplicable, with 40 million farmer households and 20,000 farms in the United States. We cannot replicate this operation method anyway.”

How does the "national situation" of cotton change?

The president of China Agricultural University, Kebing Sheng, thinks: What are the major challenges facing China's agriculture? How to use less and less land, less and less water resources, less and less agricultural labor, and higher and higher production costs to produce more, better, and safer agricultural products, which is very large One of the challenges. The entire grain area is declining. There is a very close relationship between the increase and decrease of grain area and the increase or decrease of cotton area. When the grain area increases, the area of ​​cotton is often reduced, and vice versa. The common problems facing the cotton industry and the agricultural industry now are the continuous increase in the cost and the continuous reduction of the agricultural labor force. The two issues are linked together. There are more and more peasants working in cities, especially the new generation of migrant workers. They will not go back to growing grain and cotton. A direct result of the small rural labor force is the continuous increase in labor costs. For example, the price of cotton picking in Xinjiang has risen from a few cents a few years ago to eight cents a kilogram, and now it is more than two dollars. Therefore, how to achieve mechanization and replace labor by mechanized picking has become a very important way out. The main challenge is how to produce more products in a decreasing area, which requires us to increase more yields. The increase in yield is a trend. Wang Dingwei said that I would like to have the following points about the future of cotton:

The first point of scale, this is an inevitable direction for the future. The second is that the cotton farmers should be professional, only professional, and the cotton farmers may have the necessary skills. The third is that the agricultural equipment must be refined. It is unlikely that the new generation of cotton farmers will face the loess and face the sky like past cotton farmers. The kind of sweating scene cannot happen again. Especially for cotton, its technical requirements are very strong, and it is even more necessary to do so. This may be one aspect that requires the government to guide or strengthen support in the future.

How do companies actively think and act?

The new generation of textile people is very open-minded. Shi Yuting, general manager of Shandong Huachen Textile Group, spoke: We are a full-industry chain company. I analyze why the textile industry is very confident in this industry. First, from the perspective of emerging markets, the textile industry has great room for development. And we are now entering an era where many things have changed because of the change in the network. I know very well that countries such as the African continent, India, Pakistan, and Southeast Asia have no industrial foundation or have just reached the spinning level. We haven't yet considered the transition level. We have this awareness that we have won half. The circulation industry looks for new hope in the gap. Lu Jianhua, general manager of Changzhou Keteng Textiles Co., Ltd., said that today, China has reached a very important upgrading process in the textile industry or the entire cotton industry. How do our young people understand our cotton industry in this upgrading process? Our cotton industry has precipitated this heart and has done a solid job for our industry. I think we in China should also have their own cotton training institutions at this time, gather our new generations here to share an emotion on cotton, and in-depth understanding of cotton, many experts and scholars can put their knowledge and experience Share on this platform. Old brand companies are also thinking about new ideas. According to Zhou Yu, deputy general manager of Shanghai Longtou Co., Ltd., our leading company owns Shanghai's old brand. The earliest brand was chrysanthemum, which was established in 1914. The most famous brand is the “three*”. For so many years, our brand, we feel did not operate very well. Because 100 years of attention to "manufacturing" did not think of "creation." This time, the China Cotton Association has created a brand like “China Cotton” creatively. I feel that there is an advancing role for the promotion of our national brand in China. Thus, we combined cotton with the old brand and are still considering how to combine our old brand with online sales. All in all, my idea is to serve as our end-users. I hope that through our combination of brands and Chinese cotton, everyone will create and create this wealth instead of making it.

There is great hope for accelerating the transformation Zhou Shengtao, president of the China Cotton Association, pointed out that although China's cotton industry is currently facing great difficulties, I have always been optimistic that China's cotton industry as the world's largest cotton producing country and cotton country is still promising. We must sum up lessons learned and study how to improve the mechanism and design a long-term, forward-looking system. The China Cotton Association proposed many years ago that it is necessary to establish awareness of a sense of crisis and establish a long-term mechanism for cotton industry development. Therefore, in the policy design, we must focus on the interests of cotton farmers, so that farmers have a stable comparative income, while focusing on the combination of market allocation of resources and government regulation, through the "invisible hand" and "tangible hand" in the interests of the three agricultural and industrial Find a balance between. It is necessary to comprehensively consider the ratio of grain and cotton, the basic income of cotton farmers, and the difference between cotton prices both inside and outside, but also take into consideration factors such as the bearing capacity of textile enterprises and the reasonable profitability of circulation enterprises, and establish long-term, flexible, and positive macro-control from the perspective of industrial sustainable development. Mechanisms to avoid the vicious circle of cotton, cotton, cotton, and labor. He also stressed that China's textile industry needs to accelerate the transformation of development methods and change its excessive dependence on exports and low-cost factor inputs. The first is to increase the adjustment of product structure and actively explore the international and domestic markets; the second is to actively explore and promote transnational, trans-regional, cross-industry resource allocation, improve the efficiency of resource allocation, and accelerate the pace of industrial transformation and upgrading; third is the market demand for The fundamental premise is to establish a long-term, innovative operation and truly establish a production and business model that suits its long-term development. Yang Shibin, assistant to the chairman of the China Textile Industry Federation, said that at present we have seen some gratifying phenomena. There are some factories where their alternative work has been done very well, especially since we are now strongly recommending cotton fiber from an industry perspective. The research and development are mainly based on polyester fibers, but we must see that due to the huge differences between man-made fibers and natural fibers, this work is still very difficult if we want to achieve our goals in the short term. I think we will work hard together in specific historical periods to make our own industry even better. Liu Xiaonan suggested that we should be full of confidence: We recently had a meeting with the relevant departments to study this matter. The theme is how we can further improve and improve the existing regulatory mechanism, and we can explore and establish a long-term stable and healthy development of the Chinese cotton industry. Effect mechanism. In the next step, we expect to hear more and more constructive suggestions from various parties. In my opinion, the most important issue is how to deal with the relationship between government regulation and market regulation. It is the relationship between the government and the market.