The China Cotton Association (CCA) has said that the Government’s policy of temporary purchase and storage of cotton is being misinterpreted.
Since 2011, the Chinese Government is effectively implementing its cotton purchase and storage policy to protect the interests of farmers, ensure market stability and ease price fluctuation pressure in international market, the CCA said.
However, the policy is being misinterpreted as an intention by the Chinese Government to control the world markets with its huge cotton inventory, the CCA added.
China is leader in both cotton production and consumption and hence the Government must protect farmers’ interests and ensure sufficient output.
The cotton reserves policy was launched as a contingency plan aimed at resolving periodic oversupply, but the current recession had unexpected long duration which forced the policy makers to continue with the storage plan, the CCA said on its website.
In 2012, China had bumper cotton harvest, while market remained depressed. As a result, since the beginning of new season in September 2012, the accumulated reserves touched 5.83 million tons by January 22, 2013, accounting for 85 percent of cotton production, which is a record.
The positive results of cotton policy are that growers receive higher price for their produce, and cotton prices avoid falling excessively. In 2012, cotton prices dropped by 20 percent compared to a sharp 42 percent drop witnessed in 2011, according to the CCA.
