While cotton imports flow into China at an increasing rate, the nation's cotton farmers this spring are expected to increase their growing acreage to 5.6 million hectares, hoping to cash in on the domestic market's consistently high prices.

 

China, the largest cotton buyer in the world, is expected to get 1.5 million tons of imported cotton this year. But the imports are unlikely to hurt local cotton farmers, said Gao Fang, secretary-general of China Cotton Association.

 

"Although imported cotton is cheaper, cotton produced in China is of a better quality," she said.

 

The China Cotton Association surveyed 22,283 farmers in 13 provinces and municipals across the country, and found that many are encouraged by purchasing prices of textile spinners and intend to grow more cotton than last year.

 

Wang Dingwei, head of the cotton farmer cooperation branch under the association, said that as long as there were no big reductions in cotton prices in the next two months, "the growing acreage will increase by what we expected."

 

The growth in acreage reflects an increase of 9.4 percent from a year ago.

 

According to the association's survey, textile makers can afford to pay 500 yuan (US$62.5) more for every ton of cotton grown in China.

 

The cotton price of spot transactions stood at 18,000 yuan (US$2,250) per ton earlier in 2004 but dropped to about 12,000 yuan (US$1,500) per ton last sowing season.

 

Last year, due to a significant price drop, China's cotton growing acreage shrank about 0.67 million hectares, or around 10 percent from 2004.

 

According to the latest statistics published by the National Statistics Bureau, China's output of cotton stood at 5.7 million tons last year, nearly 10 percent, or 620,000 tons, lower than in 2004.

 

Since the decade-long export quota mechanism was removed from global textile trade at the beginning of last year, Chinese textile manufacturers have largely increased their demand for cotton-made material, expecting a larger chunk in the overseas market share.

 

Cotton prices have bumped up to 15,000 yuan (US$1,875) on growing demand.

 

To match the gap between demand and domestic supply, the country imported 2.57 million tons of cotton in 2005.

 

The National Development and Reform Commission last September issued 894,000 tons of cotton import quotas.

 

Gao said in recent years some cotton farmers had cotton stockpiled till March, holding out for better prices rather than being pressured by imported cotton.

 

"The government usually issues the import quotas for cotton after most domesticcally produced cotton has been purchased," Gao said.

 

China is implementing a sliding tariff on imported cotton. The mechanism keeps the imported cotton price not much lower than domestic cotton.

 

There are 130 million cotton farmers scattered across the country and most of have small production-scale operations.

 

"Domestic cotton farmers often feel confused about the market," Gao said. "We keep talking to them about price, supply and sales."

 

Gao said some training bases would be established to showcase newly developed cotton species and growing technologies to improve average production.

 

(China Daily March 9, 2006)