Poverty alleviation and assistance: from back-to-back to hand-in-hand
After several consecutive days of gloom, the weather finally cleared up, and the chill in the mountain hollow was swept away. At the demonstration base of the Xingnong Chinese Medicinal Herbs Cooperative in Huibao Village, Daoba Town, Yinjiang County, Guizhou Province, the Atractylodes macrocephala planted at the beginning of the year had reached harvest time. On the slope, several farmers had their jackets open, straining with effort as each Atractylodes macrocephala plant was pulled up by the roots, the soil knocked off, and the tubers that had slept for nearly a year were nourished plump and endearingly sturdy.“The base now has 400 mu, and it has also driven more than 400 nearby households and over 3,600 mu of land to grow medicinal herbs. From Atractylodes macrocephala alone, it can boost average household income by 4,000 yuan.” Cooperative chairman Zhang Jun stretched out four fingers with full confidence.
Differentiating needs, rolling out credit loans and guaranteed loans
The cooperative is now on the right track, but in its early days it took many falls.“At that time I had only heard that growing herbs made money, but I did not understand the techniques and could not find a market, so the 100,000 yuan investment was lost completely.” Zhang Jun said, “Later I learned from the lesson and made a comeback, but funding became the biggest problem. Thanks to the county's small-sum subsidized-interest loans, I got 50,000 yuan without collateral or guarantees, which solved the urgent need. Now that the cooperative has grown stronger, the credit line is also getting higher and higher. This year we borrowed 300,000 yuan from the credit union as working capital.”
Yinjiang is a national key county for poverty alleviation and development work. As of now, it still has 93,700 poor people, accounting for more than 20% of the county's total population. To achieve the goal of a moderately prosperous society in all respects by 2020, time is tight and the task is heavy; and the existing fiscal poverty alleviation funds, because their total amount is relatively small, find it difficult to meet the county's needs for infrastructure construction and industrial development. Against this background, Yinjiang has expanded the scope and intensity of support and given play to the role of fiscal poverty alleviation funds in “using a small amount to leverage a big effect.”
According to Wu Hongqiang, director of the Special Industry Office of the Yinjiang County Poverty Alleviation Office, Yinjiang has differentiated the needs of different loan entities.“For registered poor households developing industries, a preferential financial policy is implemented, providing ‘no guarantee, no collateral’ credit loans of less than 50,000 yuan with a term of within 3 years, and at least 15% of the poverty alleviation funds allocated by the central and provincial finance departments is used for full or partial interest subsidies.”
For some large industry operators or leading agricultural enterprises with relatively large funding needs, Yinjiang allocated 50 million yuan in fiscal funds to establish the Huimin Guarantee Company as a guarantee platform and actively sought development-oriented financial poverty alleviation projects from China Development Bank. As of now, more than 130 million yuan in industrial poverty alleviation loans has been obtained from the Guizhou Provincial Branch of China Development Bank, benefiting 706 farming households, 6 small and medium-sized enterprises, and 10 farmers' professional cooperatives.
Pooling efforts, with poverty alleviation funds and credit funds joining hands
“Previously, the input of fiscal poverty alleviation funds and the credit funds of financial institutions were unaware of each other and lacked coordination and communication. You invested in this village, I invested in that hamlet; you invested in raising sheep, I invested in growing tea. The overall effect was not obvious.” said Gao Fangjun, director of the Financial Management Department of the People's Bank of China Yinjiang County Branch.
But now, fiscal poverty alleviation project funds and credit funds have begun to move from “back-to-back” to “hand-in-hand.” According to documents issued by the county, credit funds and fiscal funds jointly support poverty alleviation and development according to the principle of “mutual integration, each fulfilling its responsibilities, each recording its merits.” Each year, the county finance budget or coordinated superior fiscal reward and subsidy funds provide 10 million yuan for interest subsidies on loans for “one high and one special” projects (high-efficiency and specialty agricultural industries such as tea, Chinese medicinal herbs, and tourism).
“Through the joint conference on financial poverty alleviation, all banks and credit unions fully include the ‘one high and one special’ agricultural industry projects and poverty alleviation projects compiled by the poverty alleviation office and other units in the Financial Poverty Alleviation Project Bank, implementing two-way recommendation, joint screening, and support for the best.” Gao Fangjun said.
Yinjiang's innovation in financial poverty alleviation was not limited only to the plate of credit funds. In order to activate rural production factors and innovate financing methods, Yinjiang implemented “three rights” mortgages, revitalizing rural resources and assets such as forest rights, land contractual management rights, rural homesteads, and rural residents' houses, striving to blaze a path to solve the difficult problem of rural financing.
On the flat ground in front of the Edible Fungus Professional Cooperative in Kaitang Village, Banxi Town, shiitake mushrooms just picked from the greenhouses were drying everywhere. Inside, cooperative chairman Zhou Gang was discussing year-end dividends with several major shareholders, hesitating over whether to give more dividends to farmer shareholders or accumulate more funds for expanding production next year.
“Because the cooperative's benefits have been relatively good in recent years, more and more farmers are joining with land or cash. Not only can they get dividends at the end of the year, but they can also earn a wage by working at the base.” Zhou Gang said, “This year the net profit per mu is around 15,000 yuan. If the dividend ratio of 30% from last year is followed, farmer shareholders can get about 5,000 yuan per mu of land.”
With the cooperative as the leader driving development, the per capita net income of local villagers has also risen accordingly, and this year it is expected to reach 7,200 yuan.
Bad debts increasing, risk compensation mechanism urgently needs to be implemented
In order to improve the targeting and precision of the flow of poverty alleviation funds and projects, Yinjiang, on the basis of visiting poor households one by one, reasonably divided the poor population into six types of farmers: “agricultural farm owners, industrial wage workers, commercial traders, cooperative developers, skilled professionals, and policy-protected.”
“By giving different types of people different policies, credit, technical and other needs, the whole county has steadily achieved the result of lifting more than about 10,000 people out of poverty each year in recent years.” said Wu Guocai, deputy secretary of the Yinjiang County Party Committee.
Yinjiang has truly tasted the sweetness of tripartite cooperation among government, banks, and enterprises (farmers). In Gao Fangjun's words, “the willingness of all parties to cooperate has increased significantly, and the scope and channels of cooperation have expanded rapidly.” However, while financial poverty alleviation has gained broad recognition from the local government and poor people, the relevant mechanisms still need further improvement.
“At present, commercial banks still have very few loan products for rural areas and tend to issue them to ‘high-quality customers,’ but the poor population is still far from high quality.” Gao Fangjun said, “Credit support funds must repay principal and interest when due, while fiscal support funds are basically gratuitous. In actual practice, some farmers believe that neither has to be repaid, and even when the bank urges repayment, they think that after a period of delay it will be reduced or waived.”
In order to increase the enthusiasm of financial institutions, the Yinjiang County government explored and established a guarantee and risk compensation mechanism.“But the specific sharing ratio for this part is not clear, and financial institutions face relatively large default risk.” What Xia Wenjun, deputy director of the Yinjiang County Rural Credit Union, cares about is whether the risk compensation mechanism can actually be implemented, “The credit union's bad debts are now nearly 10 million yuan, and at present they can only be absorbed internally.”
At the same time, there is also the problem of delays in the availability of interest subsidies for employment and entrepreneurship loans.“The main reason is that central fiscal interest subsidy funds arrive slowly, which affects the issuance of employment and entrepreneurship loans.” Xia Wenjun said.