Cotton farmer subsidies to be extended to the Yangtze and Yellow River production areas, existing agricultural subsidies unchanged

China.com Finance, September 22 - The National Development and Reform Commission today held a press conference on the “cotton target price reform pilot and market regulation”. Zhou Wangjun, deputy director of the Price Department of the National Development and Reform Commission, said that cotton subsidies will be extended to the Yangtze and Yellow River production areas, and the original agricultural subsidy policies will remain unchanged.

When talking about the cotton farmer subsidy mechanism, Zhou Wangjun said that a target price will be determined according to farmers' planting costs plus basic returns. Whether subsidies will be given will be decided by the market price. When the market price is lower than the target price, the state will not issue subsidies. “The gap between the target price and the actual price is the amount of subsidy we should give to farmers. Whether this subsidy is given every year: when the market price is lower than the target price, the difference is given to farmers; when the market price is higher than the target price, the state does not issue subsidies. This is the important difference between the target price system we are implementing now and the previous temporary purchase and storage policy.” Zhou Wangjun said.

Zhou Wangjun pointed out that the interests of cotton farmers will be protected through three aspects: First, ensure the basic returns of cotton farmers. The principle of our target price is planting costs plus basic returns. After planting cotton, there will certainly be basic returns. Cotton production is now in oversupply worldwide, and international market prices have fallen sharply. Under such circumstances, the state should protect the interests of domestic cotton farmers. This is the first priority. At the same time, cotton farmers must also bear corresponding market risks. The target price has a guiding role: when production is high, the target price guides farmers to plant a little less; when production declines, the target price can guide farmers to plant a little more. This is the goal we want to achieve. Second, in addition to the pilot areas in Xinjiang, the state will also appropriately provide subsidies to the main production areas in the Yangtze and Yellow River basins. This principle has now been decided by the State Council; how to subsidize and how much to subsidize will be issued by the Ministry of Finance. Third, while implementing the cotton target price, the previous policies for farmers' original agricultural subsidies, including cotton improved seed subsidies, will remain unchanged.