China Cotton Network Special News: On May 3, the reserve cotton round officially began, bidding companies actively participated, and the turnover rate continued to be high, which had a certain impact on the spot transaction in the market. What is the current status of cotton acquisition and processing enterprises in Xinjiang, which is the main cotton-producing area? What are your plans for the new year? With many questions, the reporter of China Cotton Network interviewed Li Dehua, general manager of Xinjiang Lihua Cotton Industry Co., Ltd.
Mr. Li said that since its establishment in 2004, the company has experienced the test of the cotton market ups and downs, the company has always been honest, quality for the purpose of business, with the support of governments at all levels and friends from all walks of life, through a number of mergers and acquisitions and reorganization, Lihua Cotton has controlled nine domestic and foreign enterprises, participated in three companies, with fourteen cotton processing plants, a cotton textile factory, an oil factory, formed a set of cotton planting, acquisition and processing, textile, edible oil processing, warehousing and logistics, international trade, A multinational group company integrating the production of agricultural materials is also the only national-level key leading enterprise in the industry.
Mr. Li Dehua, General Manager of Xinjiang Lihua Cotton Industry Co., Ltd
Mr. Li said that with the promotion of the national reserve cotton rotation and the target price subsidy policy, the traditional business model in the past can no longer adapt to market changes, and it is better to passively accept than to take the initiative to change. Due to the impact of the reserve cotton rotation policy, the price of lint cotton is on the market, and the cotton habits of textile enterprises are changing, at least textile raw materials can maintain a low inventory, without occupying too much working capital, but this is a major challenge for traditional large-scale cotton processing and operating enterprises and middlemen. Cotton acquisition and processing is more seasonal, and if the progress of cotton sales slows down and inventories are too high, financial pressures and operational risks will also increase.
Mr. Li pointed out that it is expected that the cotton planting area in Xinjiang in 2016 will drop by about 8% year-on-year, and the yield should drop by less than 8% without extreme weather and disasters, because the reduced area is basically the sub-yi cotton area with a seed cotton yield of less than 300 kg. For the future development of enterprises, Mr. Li stressed that under the current situation, enterprises should not blindly expand their scale, but should put their energy on changing their business awareness. First of all, in the process of cotton planting, purchase and processing, domestic labor and tax costs cannot be compared with India, Pakistan and other countries; in terms of labor efficiency, mechanized planting, product quality and other countries can not be compared with the United States, Australia and other countries. If we want to change this situation, we must take the road of large-scale mechanization, reduce planting costs, and revitalize the entire industrial chain. Therefore, Lihua Cotton industry to promote the strengths and avoid the weaknesses, and strive to work the quality, consistency and three silk content of cotton. First of all, 80% of its ginning plants have built "three silk" fine picking workshops, although the cost increased by about 300 yuan / ton, but the "three wires" content has dropped significantly, meeting the needs of high-end customers. In order to ensure the quality of cotton, the company has set up a high-quality cotton promotion service center, through two years of variety tracking and selection, in 2016 promoted 400,000 acres of excellent varieties, promised to pre-harvest 50% of the cotton seeds of cotton farmers, seed cotton picking as long as the varieties of cotton returned to the enterprise and will be fully refunded cotton seeds. The company has also signed a guaranteed reserve price purchase contract with 80% of the growers of excellent varieties, which not only improves the income of farmers, but also provides stable high-quality raw materials for enterprises.
Lihua cotton industry "three silk" fine selection workshop
Indeed, the reserve cotton rotation has had an important impact on the development of enterprises, especially in the face of this year's complex market situation, enterprises can only change the old production and management awareness to find real gold in the big waves.