National Agricultural Credit Guarantee System Solves the Financing Hurdle in Agricultural Development
Today, the Ministry of Agriculture, together with the Ministry of Finance and the China Banking Regulatory Commission, jointly convened a special meeting to deploy the work related to fiscal support for establishing an agricultural credit guarantee system. This is a major measure for implementing the decisions and arrangements of the State Council on financial services for “agriculture, rural areas and farmers”, and is a major policy innovation for deepening the reform of the fiscal and taxation systems and improving and perfecting the domestic support and protection system for agriculture, carrying landmark significance. At present, we are in an important period when moderately scaled agricultural operations in various forms are advancing steadily, large numbers of new types of agricultural business entities are emerging, and modern agriculture is developing at an accelerated pace. Establishing a national agricultural credit guarantee system is a realistic and effective way to break through the “bottleneck” constraining the development of new types of agricultural business entities and to solve the problems of “difficult financing” and “expensive financing” in agriculture. Combining this with the work of agricultural departments, I would like to make three points.
I. Seize the opportunity, change our thinking, and accelerate the establishment of a new pattern of coordinated fiscal and financial support for agriculture
Finance and fiscal policy are the two major policy pillars supporting agricultural development. On the one hand, fiscal funds for supporting agriculture can, through financial leverage, play a guiding and amplifying role of “four taels moving a thousand jin” and “small money leveraging big money”, better meeting the capital needs of modern agricultural development. On the other hand, financial funds for supporting agriculture can, through fiscal guidance and support, achieve better control and reasonable compensation of operating risks and costs. More importantly, the “trinity” of industrial policy, fiscal policy and financial policy, advanced in a coordinated manner, is conducive to the organic combination of the government's guiding role and the market's decisive role, conducive to improving the efficiency and benefits of the use of fiscal funds while increasing public fiscal investment in supporting agriculture, and conducive to cultivating the market awareness, risk awareness and credit awareness of new types of production and operation entities, stimulating the internal vitality of modern agricultural development and enhancing market competitiveness.
Injecting fiscal capital to establish specialized agricultural credit guarantee institutions is a typical model of integrated fiscal and financial support for agriculture. From domestic and international practice, this fiscally supported agricultural credit guarantee mechanism has built a bridge between commercial finance and agricultural development, effectively solving the difficult problem of farmers' “difficult loans and expensive loans”, and achieving a higher level of the agricultural industry, sustainable financial development, highly efficient fiscal subsidies, and ultimately tangible benefits for farmers. In this regard, Chongqing, Beijing, Guizhou and other provinces and municipalities have already carried out active exploration and accumulated much useful experience. We believe that in the next stage, the close integration and coordinated advancement of fiscal policy and finance will become a new highlight of the central government's policies for strengthening agriculture and benefiting farmers and a growth point for investment, and will also become a powerful lever for promoting the “transformation of modes and adjustment of structure” in agriculture and accelerating the building of modern agriculture, with enormous potential and space. Therefore, agricultural departments at all levels must seize this rare historical opportunity, attach great importance to it, accelerate the transformation of ideas, broaden their thinking, innovate investment mechanisms, make every effort to promote the organic integration of industry with fiscal policy and finance, and build a new pattern of fiscal support for agriculture.
II. Give play to our advantages, take the initiative, and earnestly fulfill the important duties of agricultural departments
The agricultural credit guarantee system established with fiscal support has three important characteristics, namely policy orientation, independence and focus. Agricultural departments at all levels must adapt to and grasp these characteristics and requirements of agricultural credit guarantees, give play to their advantages, take the initiative, be courageous in shouldering responsibilities, keep a firm grip on key junctures in the establishment and operation of guarantee institutions, fully reflect the needs of agricultural development and the demands of the broad masses of farmers, and ensure that agricultural credit guarantees truly serve agriculture. First, keep a firm grip on the organizational structure. The funds for building the agricultural credit guarantee system come from the reform of the three agricultural subsidies, and therefore must be used in agriculture. To ensure this does not “go off track”, it is necessary to establish independent guarantee institutions focused on agriculture and build management teams that understand both agriculture and finance. Therefore, in terms of organizational structure, it is suggested that the current focus should be on establishing independent provincial-level agricultural credit guarantee institutions, and extending business downward through offices, branches and other means. The Guiding Opinions propose that the establishment of independent agricultural guarantee companies may have a two-year transition period, but even during the transition period, business independence must be achieved. Second, keep a firm grip on the business direction. Agricultural credit guarantee services must sink their center of gravity, take root in rural areas and focus on agriculture, striving to solve the financing difficulties of large growers, family farms, farmers' cooperatives and other new types of agricultural business entities in becoming bigger and stronger; the business content must focus on crop farming and livestock farming, and in particular must give priority to meeting the needs of moderately scaled grain operations, and on this basis gradually extend to the secondary and tertiary industries directly related to agriculture, promoting the integrated development of the primary, secondary and tertiary industries in rural areas and becoming a comprehensive agricultural credit guarantee service platform. Third, keep a firm grip on project screening. The clients of agricultural credit guarantees are vastly different agricultural production undertakings, and only with the participation of professional agricultural personnel can the future value and potential risks of projects be judged more accurately. Therefore, agricultural departments at all levels must effectively give play to their professional advantages, proactively do a good job in screening and recommending agricultural guarantee projects and in follow-up guidance after guarantees, and in identifying whether guaranteed projects should be included in the scope of fiscal support.
III. Cooperate closely, advance jointly, and ensure that the building of the guarantee system progresses steadily as planned
The leadership of the State Council attaches great importance to establishing the agricultural credit guarantee system, and Minister of Agriculture Han Changfu has also personally urged and overseen its implementation on many occasions. At present, the Ministry of Finance, the Ministry of Agriculture and the China Banking Regulatory Commission have formulated and issued the Guiding Opinions on Fiscal Support for Establishing an Agricultural Credit Guarantee System, and the next step will be to jointly study the formation of a national agricultural credit guarantee alliance. At the same time, the Guiding Opinions also clearly point out that locally, fiscal departments and agricultural departments, together with relevant departments, shall jointly establish agricultural credit guarantee institutions. Agricultural departments in all provinces must promptly report to the leaders in charge of the provincial governments, make establishing the agricultural credit guarantee system a key task at present, cooperate closely with fiscal, banking regulatory and other departments, form implementation plans as soon as possible, and push for their implementation in place. In addition, coordination with credit cooperatives, banks and other financial institutions must be strengthened to innovate more guaranteed loan products and service methods suited to new types of agricultural business entities, effectively reduce financing costs, reasonably share risks, and enable farmers to obtain credit services with simpler and faster procedures and lower fees. The Guiding Opinions point out that efforts should be made to establish and perfect an agricultural credit guarantee system covering the whole country within 3 years. In this regard, agricultural departments at all levels must have a sense of the overall situation, stand at the height of serving modern agricultural development and farmers, take the initiative, accelerate the preparation and formation of provincial-level credit guarantee institutions, actively promote the building of the agricultural credit guarantee system, and promptly report on the progress of the work.
Establishing a national agricultural credit guarantee system is a systematic project. Agricultural departments at all levels must earnestly implement the decisions and arrangements of the Party Central Committee and the State Council, further enhance their sense of urgency, responsibility and mission, strengthen confidence, tackle difficulties, continuously accumulate experience, train their teams, strive to open up a new situation in fiscal and financial support for agriculture, and provide more powerful support and safeguards for agricultural modernization.