Uncertainties Still Exist In Cotton Planting Income&Nbsp; Raw Material Production And Sales Of Textile Enterprises Affected

After the financial crisis, with the recovery of the world economy, China Cotton textiles And clothing exports recovered, the demand for cotton increased significantly, the gap between domestic production and demand increased, and cotton prices continued to rise. This year, new cotton broke through a historical high after its listing. Recently, the cotton price suddenly fell again, and the cotton price fluctuated at a high level. In order to investigate the impact of high cotton prices on various subjects of the industrial chain, in the middle and late November, the Rural Economic Research Center of the Ministry of Agriculture and the Industrial Economic Research Office of the National Cotton Industry Technology System conducted research in Huangmei County, Hubei Province, and Xinji City, Hebei Province, and visited farmers, cotton purchasing and processing enterprises, and textile enterprises. According to the research and analysis, in the high price fluctuation of cotton, all entities in the industrial chain face risks in their operating income, which should be noticed by relevant departments.

1、 Income impact of various entities under high cotton price fluctuation

1. Uncertain factors still exist in the increase of farmers' cotton planting income

It is generally believed that after the listing of new cotton, with the increase of cotton purchase price, farmers' cotton planting income can be improved. this year Seed cotton yield About 500 jin/mu, the average price is 5 yuan/jin, and the average output value per mu is about 2500 yuan, of which the cost is 1860 yuan, and the average income per mu is about 640 yuan. Compared with the previous year, the output value and profit increased by 820 yuan and 475 yuan respectively. According to 38% lint percentage, the lint yield per mu is 95 kg, and the area required for 1 ton of lint is 10.3 mu. According to this calculation, the total income from producing 1 ton of lint is 25750 yuan, the cost is 19158 yuan/ton, and the profit is 6592 yuan/ton.

According to the survey, despite the significant increase in cotton prices this year, farmers' income Increase Limited, and there are many uncertainties. First, compared with the previous year, the planting area of cotton farmers this year has declined. In addition, due to the impact of adverse weather such as low temperature in the early period and rainy days in the later period, the cotton yield has declined; Second, due to the rapid price fluctuation, the actual price of cotton sold by cotton farmers is not high. The purchase price of seed cotton in Xinji, Hebei Province, rose from 3.7 yuan/jin in early September to 7 yuan/jin in early November. Due to the continuous rise in cotton prices, cotton farmers were reluctant to sell. Only a few farmers sold at a high price of 7 yuan. In the same period, the purchase price of cotton in Huangmei County, Hubei Province rose from 4 yuan/kg to 6.3 yuan/kg at the peak, but the average selling price of cotton farmers was only 5 yuan/kg. The increase of cotton farmers' income did not keep pace with the increase of price; Third, with the price falling back, the sales price of cotton in the later period is uncertain. Most cotton farmers in Huangmei and Xinji still have more than half of their cotton unsold. At present, the purchase price of cotton has dropped sharply, and brokers and buyers are waiting to see. This has created an embarrassing situation that there is no market for the cotton with a price; Fourth, due to the rising prices of means of production, the production cost of cotton has also increased significantly this year. The survey showed that the average production cost of cotton per mu was 1300 yuan, an increase of 12% over the previous year. The increase in cost offset some of the gains brought by the increase in cotton prices.

2. Increased operation risk of processing and circulation enterprises

Cotton processing and circulation enterprises are located in the middle of the industrial chain. This year, cotton is in short supply, and the price keeps rising and fluctuating sharply, which brings great profits to enterprises as well as greater business risks.

The profit of the processing enterprise mainly depends on the sales price of lint and the purchase price of seed cotton. If the market price is relatively stable, the income of the processing enterprise is stable. If the market price fluctuates greatly, the processing enterprise can obtain the profit or loss of price difference. At the end of September, the purchase price of seed cotton was 5 yuan/jin, equivalent to 22738 yuan/ton of lint. If the enterprise purchased seed cotton for processing at this time, and the products were stored for sale at the end of October, the sales price would be 26760 yuan/ton (328 grade), so that the enterprise could obtain 4022 yuan of income per ton of processing. However, if the enterprise purchases seed cotton at a high price of 6.1 yuan/jin in the middle and late October, the price equivalent to lint will reach 26630 yuan/ton. It will also be stored for one month and then sold. Due to the fall in cotton prices during this period, the sales price has fallen back to 26500 yuan/ton, so the enterprise can not obtain high profits, and even serious losses.

3. Coexistence of profit and risk in textile enterprises

This round of cotton price rise is mainly driven by demand. After the financial crisis, the cotton textile industry has recovered. The purchase and sales of cotton and cotton yarn are booming, and the yarn price and cotton price are basically rising at the same time. From October 2009 to October 2010, the price of 328 grade cotton and 32 yarn increased by 80.0% and 81.9%, respectively. The reasonable price difference has enabled textile enterprises to obtain good income. The survey shows that the operating cost of spinning enterprises to produce 1 ton of cotton yarn (32 pieces) is 5030 yuan, the cost of raw materials is 29000 yuan, the sales price of cotton yarn is 39000 yuan, the profit per ton of yarn is 4970 yuan, and the profit margin is 14.6%, an increase of 7 percentage points over the previous year (see Table 3). However, due to the fluctuation of market price, the speculation of processing enterprises, social hot money and other subjects has been stimulated, which has caused the tension of raw material procurement of textile enterprises and affected the production and operation of textile enterprises to a certain extent. At the same time, the business risk of the enterprise is constantly increasing, facing the risk of high in and low out, that is, the cotton yarn price is inversely linked to the cotton price, and the enterprise may suffer losses.

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2、 The Influence of Price Fluctuation on the Development of Cotton Industry

The drastic fluctuation of cotton price is not conducive to the healthy development of the industrial chain. On the one hand, it is difficult for cotton farmers to grasp the trend of cotton prices and make correct production decisions, which may lead to the imbalance of cotton supply and demand in the coming year and trigger a new round of market fluctuations. On the other hand, price fluctuations are likely to trigger speculation by processing enterprises, exacerbate the tension of cotton resources, and affect the supply of raw materials and production and operation of textile enterprises.

From the perspective of cotton farmers, the high cotton price this year gave farmers good expectations, and farmers' cotton planting intentions increased. In the survey, many farmers have reserved cotton land for next year, and some farmers are also preparing to expand the cotton planting area. The blind expansion of planting area by cotton farmers may lead to the decline of cotton prices in the next year. The price transmission to farmers often lags behind, and farmers decide the cotton planting area of the next year according to the current price. Therefore, the sharp price shock affects the income of cotton farmers, thus losing confidence in the market, which is not conducive to stabilizing cotton production.

Fluctuations in cotton prices are also not conducive to the development of cotton processing enterprises. Enterprises are facing the loss of high input and low output, and the business risk increases. Due to the small investment scale, relatively simple process technology and short production cycle of the processing enterprise, if the enterprise is fast in and fast out, the enterprise can reduce the risk to a lower level and obtain basic income. However, if the market price continues to rise, enterprises can gain more income by selling cotton one day late, which will induce enterprises to speculate and delay the sales time to obtain price differential income. However, if most enterprises take this kind of speculation, it is likely to aggravate market price fluctuations in the short term.

Sharp price fluctuations have a greater impact on textile enterprises. Because the price change of downstream products is relatively lagging behind, the range is also small. According to our research on Hebei textile enterprise Changshan Shares (000158, Guba), the increase in the cost of lint raw materials was largely offset by the corresponding rise in cotton yarn prices this year, but the profit growth of the enterprise was mainly due to the correct production decisions. When the lint price exceeded 28000 yuan, the enterprise did not rush to buy cotton, so the average import cost of raw materials was controlled at 26000 yuan; When the price of cotton yarn rose all the way, instead of hoarding products, it accelerated the sales speed of products, which made the cotton raw materials purchased at a low price in the early stage obtain a better sales price, thus significantly increasing the profit margin of the entire enterprise. In general, cotton farmers are the biggest victims of market fluctuations, because their income is directly related to the price, and they have the least market information, the most lagging, and the weakest ability to resist market risks. Therefore, they often cannot sell at the high price, but have to bear the low price; Although the risks of cotton processing and circulation enterprises increase, they can still gain some profits in the game of all parties in the industrial chain.

3、 Policy recommendations

Although each main body of the industrial chain has received good benefits under the high cotton price, the stability of the price is the basis for promoting the long-term stable development of the cotton industry chain. Corresponding policies and measures should be taken as soon as possible to stabilize the cotton price and maintain the healthy development of the cotton industry.

First, the minimum purchase price policy for cotton should be introduced as soon as possible. There are many reasons for the fluctuation of cotton price this year, but the most fundamental reason is that the purchase price of seed cotton dropped significantly in the first two years, especially in 2008, the income of cotton farmers declined, the enthusiasm of cotton planting was seriously affected, and cotton production declined. This year, the gap between cotton supply and demand has stimulated speculation in the market. As cotton planting is time-consuming and laborious, with the expansion of cotton farmers' income sources and the increase of income levels, cotton farmers' enthusiasm for cotton planting is declining. If the cotton price cannot be maintained at a reasonable level, it will accelerate the trend of cotton production reduction. China is a large textile country, with strong international competitiveness in textiles, and the demand for cotton raw materials is still large. Therefore, the minimum purchase price of cotton must be introduced as soon as possible to give cotton farmers a stable income expectation, maintain the enthusiasm of cotton planting, stabilize the domestic supply of cotton, and ensure the development of the textile industry.

Second, regulate market circulation and processing, and prevent speculation. Strengthen the implementation of cotton quality inspection reform, accelerate the withdrawal of small ginners from the market, improve the access threshold of processing industry, and avoid overcapacity and excessive competition in the processing industry, resulting in unfair competition in the market. Regulate the market order, crack down on malicious speculation and other acts that disrupt the market order, and maintain a stable supply and marketing relationship between cotton farmers, processing enterprises and textile enterprises.

Third, improve the cotton market monitoring system and release cotton supply and demand information in a timely manner. At present, there is no accurate and timely release of cotton production information, resulting in blind behavior of market players. In particular, this year's supply and demand gap has been enlarged, which has become the operating theme of the futures market and transmitted to the spot market, resulting in speculation. Therefore, it is necessary to establish and improve the cotton market monitoring system, especially the tracking and monitoring of the cotton production situation, increase investment to ensure timely and accurate information, and at the same time, strengthen the tracking and research of cotton consumption trends, so as to form a more scientific cotton supply and demand balance report for the reference of market entities and policy regulation departments.