Land revenue guarantee loans let farmers taste the sweetness
At the Longshan Agricultural Professional Farm in Dongshengyong Town, Longjing City, Yanbian Prefecture, Jilin Province, legal representative Wang Lichen and workers load premium packaged rice into trucks, ready to deliver to designated customers.
"The farm has already formed an integrated model spanning planting, harvesting, processing and sales. It is thanks to the land revenue guarantee loan that we have reached our current scale," Wang Lichen said.
In 2003, this farm was still just a small workshop. "In the past, the loans banks gave farmers were all micro-loans of less than 100,000, the land that could be transferred was limited, and the interest was not low either. Even borrowing from relatives and friends cost 1 fen in interest," he said.
In 2013, Jilin Province launched land revenue guarantee loans. As a pilot, Longjing City's farmers saw immediate major changes in planting scale and income.
"After applying for a land revenue guarantee loan, the prefecture and city governments also provide interest subsidies, lowering the financing cost." An annual loan scale of 1 million yuan allowed Wang Lichen's farm not only to average an annual grain output of 1 million jin, but also to transform from a small workshop into a medium-sized processing plant with an annual processing capacity of 2 million jin.
"The loan procedure is convenient and fast, and you can borrow as much as the amount of land you plant." said Li Renshan, a villager from Yingyan Village, Laotougou Town, Longjing City. In just two short years, the land he contracted grew from 30 hectares to 60 hectares, and his annual income jumped straight to five or six hundred thousand yuan. This year he borrowed another 600,000 yuan to buy agricultural machinery and tools.
"Land revenue guarantee loans have revitalized cultivated land resources and effectively solved the problems of farmers finding financing difficult and expensive," said Zhang Guofan, chairman of Longjing City Real Right Financing Agricultural Development Co., Ltd.
Financial institutions are "wary" of collateral for agriculture-related loans, find it hard to "pay attention" to the small, dispersed capital needs of rural areas, and face high costs in opening up the immature rural financial market... Agriculture-related loans often fall into such a deadlock. However, in Longjing City's exploration, not only were loan thresholds lowered so that farmers tasted the sweetness, but agriculture-related loans also "turned around" to become high-quality resources that local financial institutions compete to pursue.
In order to resolve the contradiction between banks and farmers over loan costs, the Longjing City government tried first and took the lead, using its own public credibility to give full play to its platform role and bridge the two sides. A local real right financing agricultural development company was established, with large land-transfer entities such as family farms and professional farms as the main loan recipients, unifying land management rights as collateral and helping them secure funding support from financial institutions.
In actual loan operations, Longjing City also set up a risk fund with a limit of 10 million yuan. Once a farmer defaults, the bank can first be repaid through the risk fund, and then the real right financing company pursues repayment through methods such as transferring land revenue.
After a year and a half of operation with not a single bad debt, many banks have come to see Longjing as a "hot commodity" and begun competing to participate in lending. Zhang Guofan believes that the government's responsibility and action played an indispensable role in breaking the deadlock of difficult lending.
At present, Longjing City has issued a total of 137.811 million yuan in loans, with the smallest single loan at 50,000 yuan and the largest reaching nearly 2 million yuan. It is expected that this year land financing loans will achieve 100% full coverage.
A drying tower more than ten meters high, a grain storage warehouse like a two-story building, an electronic scale 8 meters long... In the farm courtyard of Lu Jiang in Yingyan Village, Laotougou Town, Longjing City, large-scale production equipment is complete, making it look more like a modern agricultural processing plant.
Because many local villagers go out to work, Lu Jiang began contracting land in 2010 and shifted to large-scale planting. The land revenue guarantee loan increased his loan scale by 10 times compared with before, expanded his contracted land scale to 103 hectares, and now he has begun purchasing grain from surrounding farmers for unified processing, earning more than 1.5 million yuan each year.
In Longjing, land revenue guarantee loans have already helped 315 farms gradually achieve scale.
As of the end of April this year, among Jilin Province's 60 counties (cities, districts), 31 have carried out pilot work on land revenue guarantee loans, issuing nearly 30,000 loans to farmers, forestry households, family farms and farmers' professional cooperatives, with an amount reaching 1.43 billion yuan.
Gao Cailin, director of the Jilin Province Financial Office, said that in addition to achieving full county-level coverage of land revenue guarantee loan business as soon as possible, ginseng fields, forest rights, grassland rights, aquaculture water surfaces and facility agriculture will also be used as breakthrough points to expand the application areas of the loan model.
"Under the trend of agricultural industrialization, large-scale agriculture with scaled production will become the mainstream. Land revenue guarantee loans can provide strong financial guarantees, thereby accelerating the process of rural land transfer and bringing about a new situation in which new types of agricultural business entities keep emerging," said Zhu Guoping, executive deputy director of the Jilin Rural Finance Research Center.