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Target price policies of agricultural products: an analysis of the pilot reform of cotton target price in Xinjiang

HUANG Jikun1 WANG Dan1 HU Jiliang1,2

(1.Center for Chinese Agricultural Policy, University of Chinese Academy of Sciences)
(2.School of Economics and Business Administration, Huazhong Normal University)

【Abstract】In 2014, China launched the pilot reform for Xinjiang’s cotton target price. In order to understand the implementation of the target price reform, we conduct a field survey in Xinjiang by using the stratified random sampling method. The results of the study show that the reform of target price of cotton has improved the cotton price formation mechanism, protected the interests of farmers in pilot areas, and stabilized the cotton production in Xinjiang, which have basically reached the expected goal of the reform. But we also find that several problems exist in the current reform of cotton target price, namely the huge fiscal costs and risks; the costly policy implementation of governments; the impact on the daily work of local governments; and it is easy to breed corruption and leads to social instability. On the basis of our survey, this paper argues that the government should carefully introduce the target-price policy; if they introduce the policy, then the main goal of the policy is to resist the market price risk, so that not too many types of products could be involved in the target-price reform, and the implementation and operation of the policy need to be further improved in different products.

【Keywords】 agricultural products; target price policy; pilot reform; cotton;

【DOI】

【Funds】 Soft Science Research, Project of the Ministry of Agriculture (D201401) Major Project of the National Natural Science Foundation of China (71333013)

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    Footnote

    [1]. ① The subsidy to cotton target price in Xinjiang has the specific steps as follows. (1) Determination of cotton planting area in Xinjiang. Farmers report their planting areas to each government agency from bottom to up, and agricultural departments at all levels lead the verification of these reports, and finally get the total area of cotton planting in Xinjiang. (2) Determination of cotton sales amount. Farmers report their sales amount from bottom to up, and the Development and Reform Commission at all levels lead the verification work to get the total cotton sales in Xinjiang. (3) Determination of the total subsidies for the cotton target price in Xinjiang. Total subsidies = total amount of cotton sales in Xinjiang × (target price ‒ average market price). And government should divide it into two parts of subsidies, in which the total subsidies for planting area = total subsidies × 60%; subsidies for total sales amount = total subsidies × 40%. (4) Determination of subsidy per unit area and subsidy per unit sales amount. Among them, subsidies per unit area = total subsidy for planting area / total planting area of cotton in Xinjiang; subsidy per unit sales amount = subsidy for sales amount / total cotton sales in Xinjiang. (5) Determination of the farmers’ subsidies. A farmer’s subsidies = the farmer’s cotton planting area × subsidy per unit area + the farmer’s sales amount of cotton × subsidy per unit sales amount. [^Back]

    [2]. ① According to our research team’s promise, this paper will not provide the name of counties surveyed. [^Back]

    [3]. ② Farmers’ first subsidies are issued in accordance with the 70% (official figure) of subsidies of cotton planting area. [^Back]

    [4]. ③ The CIF of imported cotton in this paper is the FC index of imported cotton (unit: cent/pound). We convert it to CNY/ton. And the price denotes the average price of all ports. [^Back]

    [5]. ① Because we use sampling survey data, cotton price purchased by cotton ginning factories and that sold by the cotton farmers do not correspond to each other. They may be different from each other. [^Back]

    [6]. ② In 2014 the total fiscal expenditure of Xinjiang in agriculture, forestry and water affairs reached CNY 40.5 billion (data from Bureau of Finance of Xinjiang, http://www.mof.gov.cn, (2015-1-30)). [^Back]

    [7]. ① Data sources: Wang, T. Tianshannet (天山网) (http://news.ts.cn), (2014-12-23); State Statistics Bureau. http://www.stats.gov.cn, (2014-12-17) [^Back]

    References

    1. He, W. Macroeconomics (宏观经济研究), (10) (2010).

    2. Huang, J. Agriculture, Rural areas and Farmers Forum of Tsinghua University, (2015).

    3. Wang, S. & Li, D. Chinese Rural Economy (中国农村经济), (2),2013

    4. Xu, Z., Xi, Y. & Zhang, S. Issues in Agricultural Economy (农业经济问题), (3) (2010).

This Article

ISSN:1002-8870

CN: 11-1262/F

Vol , No. 05, Pages 10-18

May 2015

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Article Outline

Abstract

  • 1 Introduction
  • 2 The implementation plan of cotton target price reform trial in Xinjiang
  • 3 Sampling methods and data
  • 4 The implementation effect of target price policy
  • 5 Conclusion and policy orientation
  • Footnote

    References