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China's total cotton planting area is expected to decrease significantly in 2012

According to the National Cotton Market Monitoring System (NCMMS), an intention survey of cotton planting among domestic cotton growers was made in Nov., 2011, revealing that total cotton planting area in China would decrease significantly in 2012, with planting intention down 8.2% in area year on year. Domestic growers' planting enthusiasm has been chilled greatly, mainly due to the depressed purchase price of unginned cotton and the rising planting cost in 2011, according to CCM International’s January Issue of Seed China News.

Although China reaps an overall cotton harvest in 2011, with an expected notable growth in both planting area and output, the bumper harvest actually didn't bring any increase in income to growers. Since the cotton harvest in autumn 2011, the purchase price of unginned cotton in the market ran high in the beginning but ended up in a low level, with the average price dropping substantially over the previous year. On the other hand, cotton growers' planting input also increased sharply in 2011, both in cost of labor hiring and agricultural means of production. Overall, growers' incomes in 2011 have shrunk dramatically compared with that in 2010.

Revealed by the Ministry of Agriculture (MOA) on 16 Dec., 2011, the total output of cotton would exceed 6.50 million tonnes in 2011, with an increase of around 10% over last year. Actually, this is an reduced estimated amount compared with the 7.55 million tonnes predicted by NCMMS. It is believed that the cotton production in some major production regions is probably overestimated, especially Xinjiang Uygur Autonomous Region (Xinjiang), the largest cotton planting region in China.

According to Xinjiang local government, the total cotton output in this region is estimated to reach 2.84 million tonnes in 2011, 585,000 tonnes less than the estimation from China Cotton Association. Total cotton planting area in Xinjiang amounted to 1.64 million ha. in 2011, up 12% year on year together with a 14.5% rise in total cotton output. It has been the 18th consecutive year that Xinjiang ranks first in cotton production nationwide. However, the continuing low prices of unginned cotton and rising planting cost have squeezed cotton growers' income.

Xinjiang Development and Reform Commission revealed that the cash earning and net profit of cotton growers in 2011 have decreased dramatically over the previous year, down 33.56% and 48.53% in unit cotton area respectively. Taking account of the high cost of labor hiring, growers generally expected a high purchase price of unginned cotton and have repeatedly delayed the sale after harvest. Owing to the weak demand in spot market, local cotton purchasing and storage companies and processing companies are also under enormous pressure.

For the complex and changing cotton market, industrial experts make recommendations to strengthen the strategic position of Xinjiang in cotton production. Xinjiang Development and Reform Commission suggests to build some major cotton planting areas of Xinjiang into national commodity cotton production bases, aiming to guarantee the production and quality. Moreover, the government is advocated to increase subsidies for cotton planting and set up standards of cotton picking, purchasing and processing. In order to reduce production cost, cotton-picking machine should be greatly promoted to replace the traditional manual picking.

For stabilizing domestic cotton market, the government is actively holding up the reserve price of unginned cotton, in accordance with the national policy on temporary purchasing and storage. It is understood that the temporary price for cotton purchasing and storage will be announced ahead of the cotton sowing in spring 2012 in order to increase the enthusiasm of cotton growers. Therefore, there is some uncertainties that may lead to reduce in cotton planting area in 2012.

Source: Seed China News 1201 ...

by S. C.
03 february 2012, World News > Asia