Cotton subsidies to farmers on anvil

14 Oct '08

2 min read

China is contemplating putting in place a price subsidy for cotton farmers amidst falling cotton prices, said a senior official from the government.

These remarks were made by the deputy director of the Economic & Trade Department under the National Development and Reform Commission (NDRC), Mr Zhanping at the “International Cotton & Textile Summit Forum 2008" held in Shandong province.

According to Mr. Zhanping, the economic planning body will fix the cotton prices and depending on the prevailing raw cotton market prices the farmers will get subsidies directly from the government. He added by saying that the government will not directly intervene in the market.

In order to arrest the rapid drop in prices, NDRC may purchase and store cotton especially in the cotton rich Xinjiang province, said Mr Zhanping. Elaborating further he said that the cotton output in this year is equal to that of the record high of last year, but dropping demand was creating a fall in prices.

According him farmers are also not willing to sell their crop at prevailing rates as inputs costs have gone up in the last year and the returns were not proportionate to their investments. In Xinjiang province cotton is quoting at Yuan 5.3 (77 US cents), down by Yuan 0.8 from that of last year.

Figures released by NDRC show that more than 10,000 firms have collapsed in the last few months and two thirds will restructure in tune with current demands.

Fibre2fashion News Desk - China

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