The surge in spring cocoon prices has led to a significant increase in the cost of raw silk. This rise in raw material costs has directly pushed up the price of Chinese silk. According to Le Bolin, deputy director of the Guangxi Sericulture Promotion Headquarters Office, "Currently, the price of spring cocoon fluctuates between 30 and 34 yuan per kilogram. Last year, the same period saw prices around 18 to 20 yuan per kilogram." The sharp increase in cocoon prices is driven by multiple factors. "There's a shortage of business demand for cocoon and silk raw materials, which creates an urgent need for cocoon production," Le explained. Despite the soaring prices, many companies are still scrambling to secure raw materials, even with losses and downtime.
Although a drought in the southwest that lasted eight months had some impact on spring cocoon prices, Yunnan’s production was less affected due to its relatively smaller silkworm-producing area and lower cocoon yield. A decline in mulberry planting areas and cocoon output appears to be the main cause of the price hike. According to data from the National Cocoon Office, in 2009, the total mulberry field area nationwide dropped by 8.5% year-on-year to 11.974 million mu, while cocoon output fell by 17.8% to 574,000 tons. The average purchase price of silkworm cocoons rose by 30.15% to 1,081.76 yuan per tan. Despite lower production, silkworm farmers saw their income increase by 1.251 billion yuan compared to 2008, reflecting a trend of decreasing output but increasing income in the sericulture industry.
Silkworm farming is labor-intensive, and rising land and labor costs in eastern China have prompted many farmers to abandon traditional sericulture areas. To address this, the Chinese government launched the "East-West Project" in 2006, aiming to shift raw material production from resource-scarce eastern regions to more suitable central and western provinces. Many in the industry believe this policy has been successful, stabilizing domestic cocoon output and boosting incomes in inland provinces. Guangxi, with its favorable climate and abundant rainfall, has become a major beneficiary of this initiative. In 2009, Guangxi accounted for 30% of the national silkworm cocoon output, ranking first in the country. In many towns, sericulture has become a primary source of income for local farmers.
In Liu Sanjie Township of Yizhou City, for example, 34 families engaged in sericulture generated a total annual income of 4 million yuan. "Because of the high profits, we don’t go out to work anymore and don’t feel there’s enough time for other jobs," said Wei Dingkang, a local sericulturist. While higher cocoon prices have boosted farmer enthusiasm, they have also created challenges for silk processing enterprises. At Guangxi Jia Lian Silk Co., Ltd., the increased cocoon prices have driven raw silk prices to about 280,000 yuan per ton—its highest level in recent years. Although companies are facing losses, stopping production would be even riskier. They are now looking to establish direct relationships with farmers, improve mulberry field quality, and provide technical training to ensure a steady supply of raw materials and stable incomes for farmers.
China's silk industry has grown to dominate the global market, accounting for over 70% of the world's raw silk output. According to China Customs, silk exports reached $600 million from January to March 2010, showing a slight increase compared to the same period in 2009. Industry officials noted that after October 2009, as the global economy stabilized, silk export declines gradually narrowed. In February 2010, China’s silk exports showed their first year-on-year growth since 2006, signaling a recovery. Le Bolin pointed out that with the global economy recovering and China maintaining strong domestic demand, especially in clothing and home textiles, the consumption of silk and related products is expected to grow further.
According to the National Bureau of Statistics, from January to February 2010, except for a slight drop in raw silk output, the production of silk spinning and finished silk products increased compared to the previous year. The industry achieved a total output value of 25.25 billion yuan, up 25.47%, and profits reached 712 million yuan, a 108.71% increase. However, despite these gains, the silk industry still faced a loss of 38.6%, slightly higher than the national textile industry’s 35.4%. This indicates that the recovery remains fragile. Officials at the China Silk Association noted that due to the unstable international market and rapid price increases, some merchants remain cautious, leading to a significant drop in exports during January and March. This highlights the ongoing risks and instability in the silk trade.
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