An Analysis Of The Possibility Of China's Cotton Subsidy Policy On The Market
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Xiaobian of the network introduces the possibility of China and America's Cotton Subsidy Policy on the market.
In 2014, China launched a pilot cotton price target subsidy system in Xinjiang, and the United States introduced a new agricultural bill. It abolished agricultural support policies such as direct agricultural payments and countercyclical subsidies, and replaced two policy of price loss insurance and agricultural risk insurance plan.
By comparing the relevant policies of cotton subsidies between China and the United States, this paper illustrates the impact of the relevant policy support measures on the market.
Composition of us Cotton Subsidy
The current US cotton subsidy is mainly based on the 2008 agricultural bill, which is mainly revised on the basis of the 2002 agricultural bill.
According to the bill, the government provides marketing loans, direct subsidies and counter cyclical subsidies to cotton producers. Besides, crop insurance and income insurance subsidies are also included.
Through the above subsidies, no matter how the market price changes, the income of cotton growers in the United States is at least 71.25 cents / pound, which can significantly reduce the impact of market prices on cotton farmers' income.
In addition, in order to overcome some disadvantages of counter cyclical subsidies, the US Agriculture Act 2008 added a new subsidy policy, namely the average crop income selection scheme, on the basis of the 2002 agricultural bill.
Farmers who accept the subsidy project will no longer accept the original countercyclical subsidies, but must agree to reduce 20% of the direct subsidy and 30% of the marketing loans.
The US Agriculture Act 2008 also added another new subsidy scheme, namely, the economic adjustment assistance of upland cotton, that is, to subsidize the domestic users of Upland Cotton in the United States.
In February 2014,
U.S.A
With the adoption of the 2014 agriculture act, the agricultural bill still retained loans for agricultural products (000061 shares), of which the target price of Pima cotton was 79.77 cents / pound, and the loan maturity of the export credit guarantee project (GSM 102) was shortened from 36 months to 24 months.
The new bill abolished direct subsidies, counter cyclical subsidies and average crop income options for all commodities, including a superimposed income insurance scheme for upland cotton.
According to the plan, once the actual income of cotton growers is less than 90% of the expected revenue, the superimposed income insurance scheme will provide 10% to 30% loss insurance for cotton growers.
In addition, the federal government will pay 80% of insurance premiums for cotton farmers and subsidize insurance companies that provide overlay income insurance schemes.
The superimposed income insurance scheme will be implemented in 2015, and the pitional policy is being implemented.
The interim subsidy policy is based on the formula of the annual average price of the upland cotton, the yield per unit area of 44.6 kg / mu, the 60% of the planting area in 2014 and the 36.5% of the planting area in 2015.

Comparison of US cotton support policies under the new and old agriculture act
Composition of Cotton Subsidy in China
1. cotton seed subsidy
In 2007, the central government launched a 500 million yuan fund for the promotion of cotton varieties. The subsidy area is the 8 main cotton producing areas in the three regions of the the Yellow River River Basin, the Yangtze River Basin and the Xinjiang cotton region.
In 2007, the central government allocated 10 million 800 thousand acres of subsidy to the Xinjiang autonomous region, 159 million yuan of subsidy funds, 6 million 300 thousand mu of local subsidies and 4 million 500 thousand mu of corps, with an average subsidy of 15 yuan per mu.
The Ministry of agriculture and the Ministry of Finance temporarily do not make unified demands on the subsidy scheme for crop varieties. They can adopt the direct subsidy fund or the subsidy for different price subsidies. The principle is determined by the principle of allowing farmers to get substantial benefits and increase the coverage rate of good seeds according to local conditions.
2. cotton pport subsidy
In order to solve the problem of pportation and difficulties in Xinjiang cotton pportation, since 2008, the state has carried out pportation subsidies for Xinjiang cotton and cotton yarn produced in Xinjiang and in Xinjiang cotton and cotton yarn with 400 yuan per ton.
In June 2010, it announced that the scope of pport subsidies in 2009 should be further extended to viscose yarns and cotton nets.
Beginning in 2011, the state's export subsidies to cotton fields were included in the subsidy scope, and the amount of subsidies for the relocation of the border areas was increased to 500 yuan / ton, of which cotton shifting cost subsidy was based on the annual calculation of cotton production, and the subsidy period was tentatively fixed from 2011 to 2015. The subsidy for cotton yarn and cotton pport cost was calculated from the annual accounting date, and the subsidy period was tentatively fixed from 2011 to 2015.
Since March 15, 2013, the subsidy for highway pportation has been put into effect, and the subsidy level is 500 yuan / ton.
3. Xinjiang high quality cotton base construction support
Xinjiang's high quality cotton base is of great significance for safeguarding the national cotton safety and the development of the cotton textile industry. The central government has continuously supported its construction in the 3 "Five Year Plan", and has invested 2 billion 500 million yuan in the budgetary capital construction.
This is the longest investment period for a single province and a single crop since the founding of new China.
Xinjiang's "12th Five-Year" high-quality cotton base construction total investment of 1 billion 413 million yuan.
Supporting the construction of 1 seed quality resource innovation and breeding research and development platform, 14 varieties breeding and seed introduction test base, 300 thousand acres of good breeding field, 9 seed processing lines, 610 thousand hectares of high-yielding and stable cotton production, 850 thousand acres of high standard water-saving cotton field, 932 thousand acres of machine harvested cotton, 800 thousand mu of contaminated area, and precision planting and pest control area 350 thousand mu.
4. cotton target price subsidy
In 2014, Central Document No. 1 referred to "the requirements for the pilot reform of cotton target price in Xinjiang".
The target price policy is based on the market price of agricultural products, which releases price signals to guide market expectations, and supports agricultural policy of protecting the safety of important raw material industries and protecting the interests of producers through differential subsidy.
The target price subsidy target is the planter in the pilot area. The general principle is that there are many kinds of subsidies, fewer species and less subsidies.
The main contents of the pilot reform of target price are:
First, the policy of temporary collection and storage of cotton should be abolished nationwide.
The government does not interfere with market prices, prices are determined by the market, and producers sell cotton at market prices.
The two is to implement target price subsidies for cotton in Xinjiang.
Cotton target price is announced before planting.
In 2014, the target price of Xinjiang was set at 19800 yuan / ton.
When the market price is lower than the target price, the state subsidize the producers in the pilot area according to the difference between the target price and the market price, and does not grant subsidies when the market price is higher than the target price.
The three is to improve the subsidy way, and the target price subsidy is linked to planting area, production or sales volume.
At present, the rules on direct compensation for target prices in Xinjiang have not yet been promulgated. The progress of direct subsidy policy is as follows:
First, in April 5, 2014, the national development and Reform Commission, the Ministry of Finance and the Ministry of agriculture jointly issued the target price of cotton in 2014 for 19800 yuan / ton per ton.
Two, from June 1st to August 31st, the Agriculture Department of Xinjiang autonomous region, together with the Department of finance, the Department of land and resources, the Bureau of statistics and the general investigation team, reviewed and summarized the cotton planting area data of the whole area. After confirming the accuracy and accuracy, the leading group of cotton target price reform pilot work in the autonomous region was reported in the form of official documents.

Table comparison of domestic cotton support policies from 2011 to 2014
epilogue
The United States as a developed country, in the previous agricultural bill, the support policy for cotton is far stronger than China, which is one of the main reasons for the strong competitiveness of the United States cotton market.
However, the US subsidy policy for agricultural products, especially cotton, is showing an obvious "green box" adjustment, which has gradually evolved from traditional subsidies directly to cotton planting and price to an agricultural insurance system that is not targeted at specific products. From the perspective of effectiveness, the new agricultural bill has greatly reduced the number of commodity items, that is, agricultural subsidies, and potentially sown area of crops may be reduced.
However, due to the expansion of bio energy and other incentives, some crops will grow in planting area.
In addition, because the new agricultural bill provides farmers with more market risk management strategies, the increase in income from crop insurance has led to an increase in farm income, so that farmers can accept slightly lower market prices.
The adjustment of the US new agricultural bill cleverly avoided the subsidy issue that caused trade disputes. However, the support for protecting the farmers' income has not weakened and the rules have been reasonably utilized.
Pilot projects in China
cotton
Target price subsidies, but direct support for related varieties increased, subsidies still showed a marked "yellow box" characteristics.
According to the WTO agreement on agriculture and China's WTO accession commitments, there will be "ceiling" in the future with the increase of subsidies, direct subsidies for specific commodities and subsidies to the whole agriculture, which may be restricted and reduced.
In the case of suitable conditions, we should learn from the experience of the United States in supporting agricultural products and make reasonable use of trade rules.
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