China cotton growers fear cuts in vital subsidies

China cotton growers fear cuts in vital subsidies

Chewing on mutton and sipping baiju – a typical meal in China’s Xinjiang Uighur Autonomous Region – a group of weathered farmers eagerly discusses a familiar topic: the size of this season’s cotton subsidy. “If there is no subsidy, it won’t be possible to grow cotton,” said Cheng Jinyu, who has been farming cotton for more than two decades. The neighbouring farmers nodded.

Each year, the Chinese government sets a target price for cotton, and pays farmers the difference if the market price falls short. Rising labour costs, bad weather and a lack of water to irrigate the crop have turned the 2016-2017 harvest into a particularly hard one. Even with the subsidy, it is hard for the farmers to make a living most years. “After deducting the labour cost for the cotton pickers, we farmers can hardly make a profit,” Cheng said. Xinjiang accounts for about 60 % of the total 4.9 million tons forecast by the U.S. Department of Agriculture for China’s current harvest. The vast majority is destined for China’s coastal fabric and clothing factories, though exports are expected to rise 20.4 % this season to 65000 tons. The size of the 2016-2017 subsidy will depend on the difference between the target price of RMB 18600 yuan (USD 2704) per ton and the average market price, which farmers said they expected to amount to about RMB 7300 per ton. Cheng and the other farmers said the target price was the lowest it has been since the policy was introduced in 2014-2015.

http://asia.nikkei.com


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