What stands out in the figures for Corps vs Territorial cotton output is the consistent lead in acreage (per mu) yields (columns 4 and 5). Why so much effort and hidden expense should be devoted to this pump-up has to do, most directly, with China’s burgeoning over-supply of overpriced (rel. imports/global pricing) lint cotton; so overpriced that perhaps 80% of the most recent year’s national crop sits in warehouses as unresalable “reserve”, while domestic mills keep buying imports, even at a 40% tariff. Liquidating this reserve no matter how gradually amortized will entail huge losses, but in order to avoid a recurrence of this glut of unwanted domestic cotton it is crucial that production costs be driven down so as to bring truck-side (warehouse purchase) prices down by as much as 30-35%.
Table XX Cotton (lint) import price, same at 40% tariff, and domestic reserve price
At least since the latter part of 2012, domestic reserve (subsidized) cotton has overshot even tariff-adjusted import prices, with the latter projected to fall even further as we enter the second half of 2014, while medium term or longer term a continued downslide is expected offshore. Current plans are to switch from a price premium to a acreage subsidy, thus allowing government purchase prices to decline dramatically without too much damage to farmer (farm) income. If China wishes to remain competitively cheap in the textile trade, it therefore has to reorganize the way it grows the major raw material. Or, of course, simply switch over to state-planned large-scale raw material imports from places like India and Pakistan – pr even Uzbekistan – which are running surpluses.
A major shift therefore is to be expected (indeed is in progress) in the human labor-intensive way cotton is harvested, and the Corps alone can lead the way, which entails almost complete mechanization of gathering the raw (pre-ginned) lint, using either simple row harvesters or multi-function machines that can strip and sort.