May 19, 2012

China's 2012 cotton sector appears gloomy

This 2012, the cotton output of China is likely to shrink amid rising labour costs, low levels of mechanisation and poor profitability, announced Zhou Shentao, chairman of the China Cotton Association (CCA).

The association earlier predicted the country's cotton planting area to drop 9.4% on-year in 2012.

Results of a survey by the CCA showed that China's cotton planting cost rose 17% in 2011 while cotton prices slumped, which sharply squeezed profits from growing cotton crops and reduced farmers' incentive to plant the crop.

To stabilise cotton prices, China began to implement the state stockholding policy for cotton in September of last year and purchased a total of 3.13 million tonnes for reserves.

Zhou also noted that to cope with the challenges facing the nation's cotton industry, China should take steps to stabilise cotton production and expand on domestic demand while at the same time strengthening its international competitiveness.

China is the biggest cotton producing country in the world, yielding about seven million tonnes per year and consuming around 10 million tonnes.