Wang Xiaobing on the Cotton Target Price Pilot: Very Important to the Healthy Development of the Cotton Industry
On October 18, 2014, the Zhengzhou Commodity Exchange held the 2014 Zhengzhou Agricultural Products (Cotton) Futures Forum in the Zhengzhou Commodity Exchange conference hall. Wang Xiaobing, Deputy Director of the Market and Information Department of the Ministry of Agriculture, speaking from the perspective of the sustainable and healthy development of the cotton industry, said that China is not only a major cotton-growing country,
On October 18, 2014, the Zhengzhou Commodity Exchange held the “2014 Zhengzhou Agricultural Products (Cotton) Futures Forum” in the Zhengzhou Commodity Exchange conference hall. Wang Xiaobing, Deputy Director of the Market and Information Department of the Ministry of Agriculture, speaking from the perspective of the sustainable and healthy development of the cotton industry, said that China is not only a major cotton-growing country but also a major cotton-consuming country, and the healthy development of the cotton industry is very important to China's national economy. The contradictions and problems accumulated by the previous temporary cotton purchase and storage policy have become increasingly prominent, and it is becoming more and more difficult to stabilize production and the market through policy. The Third Plenary Session of the 18th Central Committee of the Party clearly proposed accelerating the improvement of the price formation mechanism for agricultural products and focusing on giving play to the role of the market in forming prices. Therefore, the state decided to carry out a cotton target price pilot in Xinjiang and cancel the temporary purchase and storage policy. The implementation of this policy is very important to the development of China's cotton industry. The following is the content of Wang Xiaobing's speech:
Distinguished guests, ladies and gentlemen, friends, good morning to you all! I am very pleased to come to the Zhengzhou Commodity Exchange, China's first exchange to begin commodity futures trading, to attend the 2014 Zhengzhou Agricultural Products Futures Forum. The Zhengzhou Commodity Exchange pays great attention to the operation of the cotton market. In the first half of this year it organized a special symposium in Beijing, and today it once again holds a forum with cotton futures as its theme, which is of great significance for correctly guiding the trend of the cotton market in the new year. On this occasion, on behalf of the Market and Economic Information Department of the Ministry of Agriculture, I would like to express warm congratulations on the grand opening of the forum.
China is a major cotton-producing and consuming country. The cotton industry concerns cotton farmers' income, the operation of the textile industry, and economic and social development. The Party Central Committee and the State Council have consistently attached great importance to the development of the cotton industry and have introduced a series of policies including cotton and grain seed subsidies and temporary purchase and storage, effectively promoting cotton production and market stability. It is expected that this year, under policy guidance, the cotton area will be reduced to more than 63 million mu, with output of about 6.5 million tons, roughly somewhat less than last year's output, but both yield per unit area and quality have improved. In recent years, with changes in the domestic and international economic environment, the development of China's cotton industry is facing new situations and challenges. Agricultural production has entered a stage of high input and high cost, especially with labor costs continuing to rise rapidly, making it increasingly difficult to ensure stable year-end returns. The linkage between international and domestic markets has strengthened, domestic and international cotton prices have shown an obvious inversion, and it is becoming increasingly difficult to safeguard the security of China's cotton industry. The contradictions and problems accumulated by the temporary cotton purchase and storage policy have become increasingly prominent, and it is becoming more and more difficult to stabilize production and the market through policy. How to respond to these new situations and new challenges and promote the sustainable and healthy development of China's cotton industry has become a realistic and major issue that we must promptly study and resolve.
The Third Plenary Session of the 18th Central Committee of the Party clearly proposed accelerating the improvement of the price formation mechanism for agricultural products and focusing on giving play to the role of the market in forming prices. In accordance with this major decision, this year's No. 1 Central Document made specific arrangements, deciding to carry out a cotton target price pilot in Xinjiang and cancel the temporary purchase and storage policy. This is an innovative measure to improve the price policy for agricultural products under the new situation. It is of great significance for protecting farmers' interests, enhancing market vitality, and promoting industrial development. The cotton target price reform pilot must not only promote the improvement of the competitiveness of the cotton industry through market-oriented reform, but also provide experience and reference for the establishment of price formation and market regulation mechanisms for other important agricultural products. This year's new cotton has already come onto the market, and we are actively cooperating with relevant departments such as development and reform and finance, together with the government of the Xinjiang Autonomous Region and the Xinjiang Production and Construction Corps, to carry out market price monitoring, subsidy calculation, policy evaluation and other work. We will strive to achieve success in the cotton target price reform. At the same time, in response to new situations and new problems in the cotton industry, our ministry will continue to promote the adjustment of the cotton production layout, increase the research, development and promotion of major new technologies, especially factory seedling cultivation and mechanized harvesting, and further implement related support policies to ensure the basic stability of cotton production and supply.
Domestic and international practice has already shown that the futures market has the functions of price discovery and hedging, and plays an irreplaceable role in improving the price mechanism for agricultural products. This year is the first year of the cotton target price reform pilot. We believe that the Zhengzhou Commodity Exchange can stand at an overall and strategic height, further improve cotton futures trading rules in accordance with the deployment and requirements of the central authorities, resolutely prevent excessive speculation, correctly guide cotton farmers and cotton-related enterprises to actively participate in cotton futures trading, and make due contributions to the cotton target price reform and the establishment of a market-based price formation mechanism. Finally, I wish this forum complete success. Thank you all!
Distinguished guests, ladies and gentlemen, friends, good morning to you all! I am very pleased to come to the Zhengzhou Commodity Exchange, China's first exchange to begin commodity futures trading, to attend the 2014 Zhengzhou Agricultural Products Futures Forum. The Zhengzhou Commodity Exchange pays great attention to the operation of the cotton market. In the first half of this year it organized a special symposium in Beijing, and today it once again holds a forum with cotton futures as its theme, which is of great significance for correctly guiding the trend of the cotton market in the new year. On this occasion, on behalf of the Market and Economic Information Department of the Ministry of Agriculture, I would like to express warm congratulations on the grand opening of the forum.
China is a major cotton-producing and consuming country. The cotton industry concerns cotton farmers' income, the operation of the textile industry, and economic and social development. The Party Central Committee and the State Council have consistently attached great importance to the development of the cotton industry and have introduced a series of policies including cotton and grain seed subsidies and temporary purchase and storage, effectively promoting cotton production and market stability. It is expected that this year, under policy guidance, the cotton area will be reduced to more than 63 million mu, with output of about 6.5 million tons, roughly somewhat less than last year's output, but both yield per unit area and quality have improved. In recent years, with changes in the domestic and international economic environment, the development of China's cotton industry is facing new situations and challenges. Agricultural production has entered a stage of high input and high cost, especially with labor costs continuing to rise rapidly, making it increasingly difficult to ensure stable year-end returns. The linkage between international and domestic markets has strengthened, domestic and international cotton prices have shown an obvious inversion, and it is becoming increasingly difficult to safeguard the security of China's cotton industry. The contradictions and problems accumulated by the temporary cotton purchase and storage policy have become increasingly prominent, and it is becoming more and more difficult to stabilize production and the market through policy. How to respond to these new situations and new challenges and promote the sustainable and healthy development of China's cotton industry has become a realistic and major issue that we must promptly study and resolve.
The Third Plenary Session of the 18th Central Committee of the Party clearly proposed accelerating the improvement of the price formation mechanism for agricultural products and focusing on giving play to the role of the market in forming prices. In accordance with this major decision, this year's No. 1 Central Document made specific arrangements, deciding to carry out a cotton target price pilot in Xinjiang and cancel the temporary purchase and storage policy. This is an innovative measure to improve the price policy for agricultural products under the new situation. It is of great significance for protecting farmers' interests, enhancing market vitality, and promoting industrial development. The cotton target price reform pilot must not only promote the improvement of the competitiveness of the cotton industry through market-oriented reform, but also provide experience and reference for the establishment of price formation and market regulation mechanisms for other important agricultural products. This year's new cotton has already come onto the market, and we are actively cooperating with relevant departments such as development and reform and finance, together with the government of the Xinjiang Autonomous Region and the Xinjiang Production and Construction Corps, to carry out market price monitoring, subsidy calculation, policy evaluation and other work. We will strive to achieve success in the cotton target price reform. At the same time, in response to new situations and new problems in the cotton industry, our ministry will continue to promote the adjustment of the cotton production layout, increase the research, development and promotion of major new technologies, especially factory seedling cultivation and mechanized harvesting, and further implement related support policies to ensure the basic stability of cotton production and supply.
Domestic and international practice has already shown that the futures market has the functions of price discovery and hedging, and plays an irreplaceable role in improving the price mechanism for agricultural products. This year is the first year of the cotton target price reform pilot. We believe that the Zhengzhou Commodity Exchange can stand at an overall and strategic height, further improve cotton futures trading rules in accordance with the deployment and requirements of the central authorities, resolutely prevent excessive speculation, correctly guide cotton farmers and cotton-related enterprises to actively participate in cotton futures trading, and make due contributions to the cotton target price reform and the establishment of a market-based price formation mechanism. Finally, I wish this forum complete success. Thank you all!