Chinese govt hints at withdrawal of cotton reserve policy

22 Jan '14

2 min read

The Government of China has hinted at withdrawal of its temporary cotton purchase and storage policy.

The central document issued by the Government lists the general focus of the agricultural sector. The document mentions continuation of reserves for wheat, rice, corn, rapeseed and sugar, but it does not mention anything about cotton reserves, which indicates that the Government may quietly abandon its cotton reserves program.

The China National Cotton Reserves Corporation (CNCRC) had earlier announced that it purchased 5.5 million tons of cotton since the harvest began in 2013, but it has now stopped buying cotton.

Through the CNCRC, the Chinese Government tried to maintain national cotton reserve system to safeguard a stable supply of the raw material to textile mills. However, the move turned out to be self-defeating.

The CNCRC currently holds more than half of the world cotton stocks, but it cannot meet the supply to textile mills as the price is higher than the international price, and textile mills chose to import cotton.

Now, it is expected that the Chinese Government would adopt a system of giving subsidies to cotton growers.

In 2013, China’s cotton production declined by 7.7 percent year-on-year to 6.3 million tons, according to the National Bureau of Statistics. However, cotton production in the Xinjiang region remained unchanged at 3.5 million tons.

Fibre2fashion News Desk - India

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