Pricing rules relaxed for Xinjiang cotton growers

The Xinjiang Uygur autonomous region's government launched a pilot program on Wednesday to allow local cotton growers to sell their produce at market price, ending the nationwide cotton purchase and storage policy that has been in place since 2011.

In 2011, the central government introduced a plan to ensure that cotton farmers received a fair price for their produce and were not affected by market fluctuations in the wake of the global financial crisis. Since then, almost all of China's cotton has been purchased by the central government, which has control over prices.

In April, the National Development and Reform Commission decided it would abolish the policy for Xinjiang cotton beginning this year, setting a reference price of 19,800 yuan per metric ton.

Farmers will now be able to sell their cotton at market price, but will receive a government subsidy if it falls below the reference price, said Reyihan Yusup, deputy director of the Xinjiang Development and Reform Commission, during a press conference in the regional capital of Urumqi on Wednesday.

More than 60 percent of China's commercial cotton is grown in Xinjiang. Farmers around the region are currently harvesting this year's cotton.

The government will calculate the average selling price before the end of December. If the price falls below the reference price, cotton growers will receive a subsidy based on the quantity of cotton sold in February 2015. They will not be compensated if the selling price is higher than the reference point.

Vice-Premier Wang Yang said earlier this month that the experiment will help improve the country's pricing mechanism for agricultural products and give full play to the market's role in allocating resources.

The central government also hopes to attract more textile manufacturers to Xinjiang because the policy change may result in a drop in the price of cotton in Xinjiang. The central government's purchase and storage policy is still in place in other cotton production areas in China.

A plan has also been drafted to expand the cotton industry and raise its employment capacity to 1 million people by 2020 from the current number of 200,000. Xinjiang has a population of more than 22 million, 46 percent of whom are Uygur.