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Cotton farmers vexed over price drops

By Zhang Qi (China Daily)
Updated: 2008-11-28 17:38

Sharp cotton price declines have vexed farmers, with the current cotton price down 20 percent compared with the same period last year, said an industry association.

Related readings:  Xinjiang's cotton growers face sluggish market  China may subsidise cotton farmers  Trade: Cotton imports slide on slackening textile exports

The China Cotton Association (CCA) also said year-on-year plantation costs have increased by 24 percent and this has added more financial burden onto farmers.

About 90 percent of the cotton has been collected since the start of the harvest season, while farmers only sold out 33 percent of their collection, a 24 percent drop compared with the same period a year earlier, the CCA said in a recent report.

It said textile mills face unprecedented challenges as exports of textile and apparel decline and domestic demand reduces amid the global financial crisis.

China's textile producers already suffered losses earlier this year from an appreciating currency, falling export rebates and tightening bank credit.

The slack situation resulted in weak purchases of raw cotton as farmers were dissatisfied with prices and ginners were careful with purchases.

CCA urged the government to further enhance the purchase for farmers' reserves in order to stabilize sliding cotton prices.

The National Development and Reform Commission said earlier this month that the Chinese government would continue to purchase one million tons of cotton priced at 12,600 yuan ($1,845) per ton.

The central government finished the purchase of 220,000 tons of cotton last month in the Xinjiang Uygur Autonomous Region, the country's top cotton area, for state reserves, in an effort to support sliding domestic prices.

It set prices at 12,600 yuan per ton delivered to warehouses in Xinjiang, slightly higher than current prices of about 12,400 yuan per ton in the region.

However, the current movement is not enough to reverse the recession in the textile industry, said CCA. It suggested the government take more active measures to curb the slowdown, including raising the textile industry's export tax and further improving the Minimum Support Price for cotton farmers.