Half of the autumn harvest from China's largest cotton plantation area of Xinjiang Uygur Autonomous Region remains unsold.

The China Bank of Agricultural Development, the government's main financial arm on agriculture, confirmed on Thursday that the bank had used 22.35 billion yuan (US$3.3 billion) of the fund earmarked for 2008 by the central government to provide loans to firms to buy cotton by the end of October, and more financial assistance was planned. The bank could not provide the specific figure of expected subsidies.

However, the bank's statistics showed that the credit, which has gone higher than the same period of last year, has only helped growers sell half of this year's cotton harvest, or 1.29 million tons so far.

Xinjiang produced 2.9 million tons of cotton last year, accounting for more than one third of the country's total.

The bank used 28 billion yuan of the government's 2007 subsidies in making low-interest loans to help farmers sell the crop last year.

"This year's cotton subsidies would be inevitable higher than that of last year, as the government aims to protect millions of cotton growers from being hurt by the sluggish market," said Ding Xingui, an official from the Xinjiang branch of the bank.

Ding said that many cotton dealers have complained their cotton stockpiles were too high and are reluctant to buy more.

Statistics from the National Development and Reform Commission showed that the cotton price in October plummeted by 2,000 yuan per ton, from 13,722 yuan in August.

Xu Wenying, head of the China Cotton Textile Industry Association, attributed the sales plight to shrinking demand from the upstream industry.

"Textile and garment factories in south China are having difficulties in eking out business, as the industry became one of the hardest hit in the global financial crisis," he said.

Xinjiang has 1.6 million hectare of cotton fields. Millions of impoverished farmers find seasonal jobs in Xinjiang picking cotton.

(Xinhua News Agency November 6, 2008)