Cotton Subsidies High, Production Falling

Cotton farmers in China's Xinjiang Autonomous Region will receive subsidies of 500 yuan per mu (about $468 per acre) for the 2015 crop, up from 440 yuan last year. The subsidy is as high as 540 yuan in southern Xinjiang.

The "target price" subsidy in Xinjiang will be mostly distributed according to the amount farmers sold by the end of January 2016 at a rate of 1.99 yuan/kg. Some special cotton got a higher subsidy of  2.58 yuan/kg. Farmers in southern Xinjiang got a subsidy of 141.75 yuan/mu.

Only a few other provinces have announced their cotton subsidy for this year.

• Shandong reduced its subsidy to 150 yuan/mu for the 2015 crop, down from 235 yuan last year.
• Hebei Province raised its subsidy to 201 yuan/mu, up from 164 yuan/mu last year.
• Henan Province's subsidy is 140 yuan/mu, slightly higher than last year.

A survey of 5000 cotton farmers conducted in January by the national cotton technical monitoring project reported that all the farmers received subsidies last year for the 2014 crop. The average subsidy received was 349 yuan/mu (491 yuan/mu in Xinjiang and 170 yuan in nine other provinces). The subsidy was equal to 23 percent of the gross value of farmers' production per mu, yet they still reported a net loss.

According to official statistics, cotton planting was down 10% in 2015 and output fell 9.3%. Cotton production is down 18% since 2012. Some industry people think production has fallen faster than official statistics indicate.

This year, Shandong farmers say the subsidy doesn't make up for the loss in revenue from falling prices. A November survey indicated Shandong farmers intend to plant 7.1% less cotton this year. That comes after a 34% decrease last year. Henan's planting intentions are down 8.9%.

The National Bureau of Statistics reports that 62.5% of cotton production is now produced in Xinjiang.