Macro Environment: Cotton Industry Is Facing New Normal Situation.

China's economic development is facing a new normal.

In the new economic environment, there is a new trend of development.

Yu Bin, Minister of macroeconomic research of the State Council Development Research Center, said that China's economic development has entered a new normal, and its economic growth rate has shifted from high speed growth in the past to rapid growth.

There are three major changes in the development of the economy under the new normal: first, from quantity expansion to quality improvement, two from resource allocation from department to department, and three from government to market.

It is manifested in the major changes in the mode of economic development, emphasizing on the speed and scale of the past, relying on high input, high consumption and environmental resources.

The extensive growth has gradually shifted to the intensive growth of quality and efficiency.

At present, most industries in China are overcapacity and supply exceeds demand. Under such circumstances, the direction of development needs to be changed to the depth adjustment of stock adjustment, and the driving force of economic growth will gradually turn to new growth point.

In the past more than 30 years, China's industrialization process has developed rapidly, and the market competitiveness of the manufacturing sector has been greatly improved. The gap between the industrial sector and the developed countries has obviously narrowed.

However, in the service industry and the agricultural sector, that is, the primary industry and the third industry, there is still a clear gap between China and the developed countries.

At present, China's agriculture still maintains a small-scale production mode mainly relying on labor input.

And when a large number of labor force is needed to produce agricultural products, the cost of agricultural products will naturally increase greatly when the cost of labor has risen substantially. Therefore, the state has to raise the purchase price of agricultural products substantially, so as to raise the enthusiasm of farmers and agricultural production and ensure the supply of agricultural products.

But in the new economic situation, the marketization mechanism is the main body. Obviously, the mechanism to improve subsidies or product prices is not suitable for industrial development.

The central economic work conference pointed out that we should change the mode of agricultural development, speed up land circulation, and expand the road of scale operation as soon as possible.

The scale of planting will reduce labor input and reduce production input of large and medium agricultural products.

Obviously, this is the new situation facing the industry under the new normal.

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Although the state adopted a temporary purchasing and storage policy in 2011~2013, the price of the underside opened up to buy cotton, which provided strong support for the protection of cotton farmers' income. However, the domestic cotton area showed a declining trend year by year, and because of the excessive domestic and foreign cotton prices, the competitiveness of the domestic textile industry declined, and the national reserves exceeded 10 million tons, which resulted in huge cost.

Based on this, in 2014, the state adopted a target price policy instead of a temporary purchase and storage policy in Xinjiang. At the same time, it supplemented the quota subsidy of 2000 yuan / ton in the 9 provinces of the mainland, trying to protect the cotton farmers' reasonable income, stabilize cotton production and promote the sustainable development of China's cotton industry without affecting the market.

What is the effect after the implementation of the target price? From the perspective of market operation, the goal of subsidy does not affect the market price basically, and the final effect of stabilizing cotton production remains to be seen.

From a recent survey of cotton farmers' cotton planting intentions in 2015, the trend of a sharp decline in the area is basically determined. The area of the Yangtze River cotton and the Yellow River cotton area is reduced by more than 40%, and Xinjiang's reduction is more than 10%.

Even so, next year's policy adjustment (target price reduction) should also be a big probability event. In the next two or three years, the trend of the decline of cotton area may not be fundamentally reversed.

The change of cotton production will inevitably affect the cotton seed market. There are three visible impacts. One is that the market demand for cotton seeds in the mainland cotton area has been greatly reduced. The two is that some enterprises have lost confidence in the market and sold at low prices. Three is the delay of cotton farmers' seed buying time.

Do these three points indicate that the "cold winter" of the cotton seed market has arrived?

I believe that the reduction of cotton planting area and regional changes will continue to affect the cotton seed industry. The cotton seed industry will face severe situation in the next few years, and cotton seed enterprises must prepare well for the winter.

At the same time, under the circumstances that the development environment of the industry is difficult to change, the operators of cotton seeds must change their contingency and seek opportunities in danger.

From the promotion of insect resistant cotton to self breeding, the development of Guoxin seed industry, which has been focusing on cotton seed management for 30 years, has been developing continuously. It is a basic experience to seize the opportunities brought by changes in the situation.

Facing the adjustment and influence of this round of policy, Guoxin seed industry will make strategic adjustment from three aspects.

First of all, we must firmly strengthen our confidence in the cotton market in the mainland.

Although the cotton area in the mainland has been greatly reduced, there should be an area of more than 15 million mu, and the demand for cotton seeds of about 10000 tons will win the trust of cotton growers as long as the varieties are good and the service keeps pace with them.

The current market is so cold, but in some areas of the Yangtze River cotton region, Guoxin H318 cotton seeds are still selling well or even out of stock. The reason is that good varieties are fundamental. In the future, efforts should be made to increase breeding and increase market share by market competitive varieties.

The second is to vigorously develop the Xinjiang market.

Over the past two years, Guoxin has invested billions of dollars in Xinjiang, including the construction of the Jian Liang cotton processing plant, the increase of its own breeding farm area, and the cooperation in the development of scientific research units. It has the basic conditions for making a difference, and the state has mainly supported the development of Xinjiang cotton growing area. I believe that Guo Xin can contribute more to Xinjiang's cotton production in the future.

Third, we should actively and steadily expand the scope of operation.

We should fully explore Guoxin's market network and brand value in the cotton market in the mainland, and market oriented, actively carry out the business of maize seeds in the mainland.

In addition, Guoxin hopes to do something to improve the competitiveness of China's cotton growing industry in the international market.

Through cooperation with China Agricultural University, Guoxin carried out experiments on machine picked cotton in the mainland, and achieved initial results. Combined with mechanization and simplified cultivation techniques, the cost of cotton planting was significantly reduced, and the basic income of cotton farmers was guaranteed.

Only cotton growers can benefit from cotton planting and make money. Cotton will have an area. Cotton seed operators will have the opportunity to serve the cotton farmers and develop themselves.