China Textile Federation Gao Yong: Recommends That The Central Government Implement Cotton Direct Subsidy Policy

The cotton purchase and storage policy did play a positive role in supporting the market at the beginning of its implementation. However, with the continuous implementation of the policy and the increasing scope of storage and storage, the supply of cotton in the market was in short supply. Spin The business demands of enterprises. Regarding this, Gao Yong, vice president of China Textile Industry Federation, said: "only by implementing direct subsidy policy for cotton farmers can we break the existing cotton industry predicament. At present, the authorities are studying the details of the policy, and the next step may be a pilot project, which may be promoted in a year. Xinjiang is one of the pilot areas that we recommend. "

China Securities Journal: at present, the turnover of cotton reserves is rather cold. As of July 16th, the total amount of listed cotton was 12137004.91 tons, with a total turnover of 2989331.453 tons, with a total turnover of only 24.63%. What is the reason for this?

Gao Yong: there are three reasons. First, the storage price is too high, about 19000 yuan / ton, resulting in the overall turnover is slack. Recent turnover has picked up because most of the stored cotton is Xinjiang cotton and imported cotton, which is of better quality and is welcomed by enterprises.

Second, cotton quality in 2012/13 cotton season is too poor. Because this year is open storage, many cotton shoddy. And because the quantity of storage and collection is too large, it is difficult for the inspection department to screen carefully, and all the cotton collected will lead to a decline in the overall quality of cotton. In general, Xinjiang cotton and imported cotton are of better quality. Xinjiang cotton is mostly stored in warehouses in Xinjiang and near Xinjiang provinces. Therefore, enterprises buy cotton according to the location of the warehouse where the reserve cotton is located to determine whether to buy it.

Third, the issue of enterprise funds. Recently, textile enterprises have low operating efficiency and insufficient liquidity, and at the same time, bank loans have also tightened. They can only buy as many as they need.

China Securities Journal: why is the storage price high? What is the current survival situation of textile enterprises?

Gao Yong: in 2011/12, the amount of cotton used in China and India increased sharply, and it increased the whole world. Cotton price The highest price reached 32000-33000 yuan / ton, when international cotton prices were flat. However, since the beginning of 2011, cotton prices began to plunge and fell to around 26000 yuan / ton, and many enterprises, including textile enterprises, reflected the relevant departments, hoping that the state could introduce policies to support the market. Therefore, the purchase and storage policy came into being, and the cotton price at that time basically stabilized at 20000 yuan / ton. Domestic cotton prices therefore stabilized, but the international cotton prices continued to fall, once fell below 13000 yuan / ton. Last year, the difference between the domestic and foreign prices remained at 6000 yuan / ton in the last six months.

It can be said that the initial purchase and storage policy was born in the market demand and played a positive role in stabilizing domestic cotton prices. However, after the domestic cotton prices stabilized, domestic cotton prices and foreign cotton prices had a larger price difference, coupled with the implementation of the policy of purchasing and storage in 2012/13, the price was raised from 19800 yuan to 20400 yuan, and it was open to storage and storage. Almost all the 2012/13 cotton output in the year was about 6000000 tons.

After the rise of domestic cotton prices, the spread between domestic and foreign markets has further increased, resulting in higher cotton prices in China than the international market. From the perspective of industrial chain, a large number of imported cotton yarn has led to a large number of spinning enterprises at the front of the industrial chain. In other words, the current situation of the textile industry is to sacrifice the most advanced spinning enterprises to preserve the entire industrial chain.

China Securities Daily: do you have any attitude towards whether the direct subsidy policy is used to replace the purchasing and storage policy? Will 2013/14 cotton direct subsidy policy be implemented?

Gao Yong: China's existing cotton Policies, whether imported cotton quotas, sliding tax, or storage, are all built on the basis of protecting the interests of cotton farmers. However, there have been some drawbacks in the implementation of a series of policies for many years. On the one hand, the interests of cotton farmers have not been effectively protected. The processing and collection of processed cotton is not the result of cotton processing. Most of the benefits are obtained from the intermediate links between the embossing plant and the cotton marketing enterprises. The other side is that the textile enterprises suffer great damage due to the high cost of raw materials. Therefore, we first put forward the policy of direct subsidy to the central government and made direct subsidy to cotton farmers. Only through direct subsidy can we break the existing cotton dilemma.

In addition to the above reasons, from the perspective of capital, it is also very difficult to continue collecting and storing. 2013/14 cotton season has been identified to continue to purchase and storage, if the same year with the same number of 6 million tons of storage, plus the original stock will reach 14 million tons or so, such a large inventory is a disaster, there is no place to store, two is the storage and financing from where, the relevant banks on the capital has been unable to continue to support such a large-scale storage.

However, when the direct subsidy policy is to be implemented for at least one year, the authorities are now studying the details of the policy. The next step may be a pilot project, which may be promoted in a year. Xinjiang is one of the most popular pilot areas recommended by us.

Of course, direct subsidy may also have drawbacks, not that direct subsidy is the best way. We advocate direct subsidy only to break through the current cotton system, so that cotton farmers can get direct subsidies to the state. After the direct subsidy, the labor productivity of the cotton industry will eventually be improved. The current small-scale peasant cotton planting industry must be developed in the direction of large-scale and mechanized production so as to make China's cotton industry competitive.