Target Policy Will Improve Cotton Production Stability In China

< p > < strong > > a href= "//www.sjfzxm.com/news/index_c.asp > > target price < /a > policy will improve the stability of China's cotton production < /strong > /p >

< p > April 2014, the state related policy department said that the cotton target price policy should be implemented, the temporary purchasing and storage policy should be abolished, and the producers would sell cotton at market price.

When the market price is lower than the target price, the state subsidize the producers in the pilot area according to the difference between the target price and the market price, planting area, yield or sales volume, and when the market price is higher than the target price, the state does not grant subsidies.

The method of specific subsidies shall be formulated and released to the public in the pilot areas.

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< p > 1, the price of last year decided that next year a href= "//www.sjfzxm.com/news/index_c.asp" > production < /a > became the past.

Cotton production and consumption cycle is one year.

It takes about half a year from cotton production to listing. Once the planting area is determined, the market price changes can only affect the next year's output.

The output of this year depends on the price of the previous year. The price of this year determines the next year's output.

In the absence of the target price policy, the price of seed cotton is generally higher, the planting enthusiasm of producers is increased, the planting area is enlarged, the output of seeds is increased, the price of seed cotton is reduced, the enthusiasm of producers is reduced, the planting area is reduced, the output is reduced, and the price of seed cotton is raised.

The fluctuation of actual price and output tends to be larger and larger, away from the equilibrium point, forming the so-called "divergence spider web".

Target price policy is expected to cut off the driving force of the cobweb oscillation and form a stable planting expectation in the future.

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< p > 2, fiscal bypass for cotton production supplementary supply.

The target price policy builds a market external supply bridge between the cotton producers and the financial subsidies in the policy implementation area. When the market is insufficient, the producers obtain the sustainable nutrition from the market outside the market.

The implementation of target price policy will break the cycle of cobweb oscillation caused by the fluctuation of cotton production and market prices, and improve the stability of domestic cotton production.

Even if the mainstream price of seed cotton market is relatively low, under the target price policy background, Xinjiang cotton producers receive subsidies to avoid losses and ensure that the sowing area of cotton is stabilized.

The target price policy forms a buffer between the low price and the sown area.

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< p > < strong > target price < a href= > //www.sjfzxm.com/news/index_c.asp > policy > /a > no active intervention market price < /strong > /p >

< p > cotton producers sell cotton at market prices.

When the market price is lower than the target price, the state subsidize the producers in the pilot area according to the factors such as price difference and planting area, production or sales volume.

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< p > 1, target price policy hopes to separate from the market.

From the content of policy announcement, the target price policy aims at ensuring the basic income of the producers.

Markets and policies operate independently of each other.

Subjectively, policy does not want to intervene in the market through target price subsidies.

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< p > the market is formed through competition and compromise between buyers and sellers.

If there is a target price policy and no target price policy, whether the game psychology between the market players is consistent with the final result? The effect of target price policy on the market needs time observation.

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< p > 2, target price policy becomes the next action absorption device, which reduces the difficulty of market downlink.

The market price is determined by the supply relationship, which is determined by the expectation of the market players on the balance between market supply and demand.

From the perspective of market players' game and price formation mechanism, the target price policy will lead to different market effects under different market backgrounds.

When the market supply is insufficient, the market has the power of action, and the target price policy basically does not play a role in the market.

When the market supply and demand balance, the market remains relatively stable, the target price policy plays a relatively limited role in the market.

When the market supply exceeds demand, the market is brewing a larger downward pressure. In order to find pressure energy release, the pressure operation target is easy to break through or squeeze the market space.

Financial subsidies outside the market system provide potential subsidised space for subsidised people, and become a downward pressure on the market to release potential targets.

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< p > cotton growers are located at the front-end of the industrial chain. The seed cotton market price is the basis of the lint market. When the market has the ability to act, the target price policy becomes the next action absorption device, which reduces the difficulty of the market downward, and to a certain extent, leads the market down passively.

The more the target price is higher than the market price, the easier the market will fall. At the same time, if the effective stock consumption is relatively high, the two will form a downward pressure.

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