Build a down-to-earth rural financial service system to activate dormant capital

——A true record of rural financial innovation in Qionglai

As a typical major agricultural county (city) in our province, Qionglai City has a total population of 660,000, of which the agricultural population reaches 408,400; the city's stable grain crop area reaches 660,000 mu, with 1.33 million pigs slaughtered annually, and a total aquaculture area of 10,530 mu.

In recent years, in order to promote agricultural transformation and upgrading, Qionglai, while adhering to the basic rural operating system, has deepened the reform of the rural property rights system and further advanced rural financial reform. By focusing on the effective integration of fiscal support policies for agriculture with financial services, it has striven to form a development pattern in which policy-based finance, commercial finance and cooperative finance coordinate and complement one another.

Today, with the continuous innovation of rural financial services, more and more rural financial products that are more “down-to-earth” are being born in Qionglai, opening up a bright sky for alleviating the difficulty and high cost of financing. More importantly, flexible financial services have accelerated Qionglai's agricultural development toward large-scale and intensive operation, continuously raising land output, resource utilization and labor productivity, and fully achieving the upgrading of agriculture.

Rural financial reform is taking the lead here into deep waters.

A reform that must be carried out

“As a major agricultural county, if Qionglai wants to accelerate the transformation of its agricultural development mode, then in addition to inputs in materials and science and technology, it needs even more institutional and systemic innovation to break through development bottlenecks”, said Jiang Xiaolin, director of the Qionglai City Coordination Office, getting straight to the key point. In his view, because agriculture is a weak industry, its development needs more policy support.

For agriculture to upgrade, finance is the core support, but this is precisely a difficult problem that has long plagued development in vast rural areas. “To put it plainly, it is because of the lack of collateral to resolve risks, as well as means to reduce risks, that banks and other financial institutions are unwilling to put money into rural areas.” This is how Wang Xiang, director of the Qionglai City Financial Office, understands the difficulty and high cost of rural financing.

In order to smoothly guide financial capital to continuously flow into modern agricultural development, Qionglai began a top-down financial reform: taking demand as the guide, it focused on continuously innovating rural financial products and service methods in terms of institutions, platform services, risk prevention and control, and product development, in the hope of accelerating Qionglai's agricultural transformation.

The reform first tackled the problem from institutions and systems. Jiang Xiaolin, director of the Qionglai City Coordination Office, said that according to the method of advancing by category, on the one hand they increased non-financing services and established an insurance system related to agricultural production and market fluctuations, improving agriculture's resistance to natural and market risks; at the same time, in order to stabilize land transfer relations, they actively carried out performance guarantee services, laying a good foundation for large-scale agricultural development. On the other hand, they increased rural financial financing services, realized the free flow of production factors between urban and rural areas, and continuously boosted the prosperity of the rural economy.

“An important sign of developed modern agriculture is complete rural financial services.” said Mao Zhongxin, deputy director of the Qionglai City Coordination Office.

A wave of enthusiasm set off by one non-financing guarantee

At the end of 2014, farmers in Zhongshan Community, Shuikou Town, Qionglai, the owner of a land transfer project, and Chengdu Shouxin Non-Financing Guarantee Company signed a tripartite agreement. In this contract, valid for as long as 20 years, the farmers and the project owner pay fees to the guarantee company each year at the standard of 20 jin of yellow rice per mu. The guarantee company in turn provides a guarantee for the transfer behavior of both parties.

“Regulating the performance behavior of farmers and investing enterprises is crucial to stabilizing land transfer relations.” said Wei Sucai, deputy director of the Qionglai City Agriculture and Forestry Bureau. With the emergence of the Zhongshan model, non-financing guarantee products have become the thing most eagerly awaited by the vast number of farmers and project owners in Qionglai.

In order to increase policy support for stabilizing large-scale land transfers, on June 25 this year, the "Implementation Opinions of Qionglai City on Establishing a Risk Prevention Mechanism for Rural Land Transfers" was officially issued. Qionglai will specially allocate a portion of the fiscal reward and subsidy policy for modern urban agriculture to subsidize land transfer performance guarantee fees, among which the guarantee fees borne by owners and farmers are subsidized by 40% and 60% respectively. At present, a total of 3 cooperatives in the city have completed signing, with a guaranteed transfer area of 3,191.95 mu, and the area under performance guarantee this year is expected to exceed 10,000 mu.

In addition, in order to continuously improve agriculture's ability to resist natural risks and market risks, last year Qionglai also established and improved an insurance system in the production process of major agricultural products such as pigs, rice, corn and rapeseed. It is reported that since the launch of the pig price index insurance system, Qionglai has piloted price insurance for more than 7,000 pigs.