China is abandoning a stockpiling programme that has seen the nation run up an outsized hoard of cotton that it must now sell at a loss, pledging instead to switch to a subsidy system for cotton farmers this year.
Beijing’s effort to use the state reserves system to maintain cotton plantings and thus a secure supply of raw materials for textile mills has backfired spectacularly. Higher prices meant that cotton flowed to the state reserves – which now by some estimates account for half of world cotton stocks – while denying mills the supply they needed.
The No. 1 central document, which typically lays out priorities for the agricultural sector, called for a price subsidy trial for cotton grown in Xinjiang – where it is a major product of the quasi-military Xinjiang Production and Construction Corps – and for soyabeans grown in northeast China, home to most of the nation’s soya grown for human consumption.