When Will the Financing Difficulties of Modern Agriculture Be Resolved?
Not long ago, the China Banking Regulatory Commission issued the "Regulatory Guidelines on Strengthening the Construction of the Three Rural Financial Service Mechanism of Rural Commercial Banks," requiring rural commercial banks to continuously enhance their distinctive, specialized, and refined capacity to serve the "three rural" sectors——
The Central Rural Work Conference proposed that no matter how tight the financial resources, it is necessary to ensure that agricultural investment only increases and does not decrease, to coordinate and integrate agriculture-related funds, innovate agricultural investment and financing mechanisms, and improve the financial support system for agriculture.
Insufficient capital supply has always been the crux constraining the development of modern agriculture. In fact, in response to the problem of financial blood deficiency in developing modern agriculture, many departments have thought of many methods and made constant big moves over the past year: integrating fiscal funds so that agriculture-related subsidies are no longer "sprinkled like pepper"; two targeted reserve requirement cuts, releasing a signal of strong support for "three rural" credit; guiding social capital into agriculture, and modern agriculture has even attracted the favor of internet enterprises. It is believed that with the injection of more fresh financial blood, the funding problems troubling modern agricultural development will be gradually resolved.
Ensure That Agricultural Investment Only Increases and Does Not Decrease
Developing modern agriculture requires doing many things, but the total amount of fiscal funds supporting agriculture is limited, and there are still problems of multi-channel management and scattered use. This requires efforts to strengthen the coordination and integration of funds and improve efficiency of use
Wanyan Wenli is a family farm owner in Wenshang County, Shandong Province, operating 2000 mu of land. "Technology, manpower, management and other issues are minor matters; only money always worries me. Every year, just the cost of paying for land transfer is about 2 million yuan." He calculated that in addition to land transfer costs, there are also several fixed major expenditures such as infrastructure investment, agricultural materials and pesticides, agricultural machinery and equipment, and labor costs.
However, Wanyan Wenli clearly feels that the state's fiscal investment in the "three rural" sectors is increasing year by year. "Every year I can receive four subsidies including direct grain subsidies and comprehensive agricultural materials subsidies. In addition, project funds from agriculture, land, water conservancy and other channels can also help us improve infrastructure." Wanyan Wenli said, "Funds are also being allocated more and more promptly. For some relatively stable agriculture-supporting funds, a certain proportion has been pre-allocated starting from the previous year."
However, can the fiscal funds that increase year by year meet the needs of modern agricultural development? "Although the total public fiscal investment is very large, it is still not enough when distributed to each locality." An industry insider admitted frankly. Developing modern agriculture requires doing too many things, and fiscal funds are, after all, limited in total amount. In actual operation, there are still problems of multi-channel management and scattered use of agriculture-supporting funds. This requires efforts to strengthen the coordination and integration of funds and improve efficiency of use.
Take farmland water conservancy construction as an example. There have always been project funds invested in comprehensive agricultural development, land consolidation, and other projects. The total amount of funds is not small, but there are problems of scattered funds and lack of coordination. For this reason, starting in 2012, Anhui Province promoted the establishment of farmland water conservancy planning committees in counties and urban districts, led by administrative leaders, to implement agriculture-supporting and water-related projects from various departments uniformly according to county-level farmland water conservancy construction plans and to integrate and use funds.
"Although the results are obvious, there are also problems. Each project has different requirements, and some rules and frameworks are really difficult to break through in specific implementation." A relevant person in charge of the local water conservancy department admitted frankly that this problem is universal and not easy to solve. Relevant departments need to explore and improve the way funds are allocated at a higher level and break through the compartmentalized fund arrangement model.
What is very important is that fiscal money must be used on the "blade," invested in the public areas of agricultural development, and used to solve problems that farmers cannot solve individually household by household. Experts suggest ensuring that financial resources are concentrated in key links and areas of agricultural modernization, focusing support on agricultural infrastructure construction, structural adjustment, major grain-producing counties, and farmers' income growth, and directing newly added subsidies toward important agricultural products such as grain, new types of business entities, and main producing areas.
Open More Channels to Find Funds for Farmers
As the process of agricultural modernization accelerates, large growers, family farms, cooperatives and other new types of business entities are developing rapidly, and their financing needs have changed greatly compared with traditional farmers
For the 2 million yuan needed for land transfer, Wanyan Wenli also went to a bank. After much difficulty, he obtained a "four-household joint guarantee" loan, but unexpectedly one of the households "disappeared" with the money, dragging down his credit, and now he cannot get a loan. Although what happened to Wanyan Wenli is special, the problem of farmers having difficulty obtaining loans is widespread. During interviews, many new types of business entities like Wanyan Wenli had worried about lacking money. Generally speaking, farmers often lack the collateral banks require, farmers feel that the threshold for bank loans is a bit high, and coupled with cumbersome procedures and long approval cycles, many people choose to give up.
Zhu Xinkai, a professor at Renmin University of China, said that as the process of agricultural modernization accelerates, large growers, family farms, cooperatives and other new types of business entities are developing rapidly, and their financing needs have changed greatly compared with traditional farmers. "Because of scale operation, the funding gap of new types of business entities keeps expanding, and financing amounts keep increasing. The development of modern agriculture is increasingly inseparable from financial support." Zhu Xinkai said.
At present, the financial needs of China's "three rural" development have not yet been effectively met, and the channel between demand and supply is still not smooth enough. This has become one of the most important factors constraining the development of modern agriculture.
Last year, the General Office of the State Council issued the "Several Opinions on Financial Services for the Development of the 'Three Rural' Sectors." According to the requirements of the "Opinions," on the one hand, it is necessary to solve the problem of insufficient rural financial capital supply by enriching the entities supplying rural financial funds, increasing the total supply, and innovating the methods of capital supply. On the other hand, it is necessary to innovate rural mortgage (pledge) guarantee methods and open more channels for farmers to find funds.
After the introduction of the "Opinions," the China Banking Regulatory Commission immediately issued the "Guiding Opinions on Promoting Financing Guarantee Institutions to Serve Small and Micro Enterprises and the Development of the 'Three Rural' Sectors," using 10 detailed measures to further implement the requirements proposed in the "Opinions."
Not long ago, the China Banking Regulatory Commission issued the "Regulatory Guidelines on Strengthening the Construction of the Three Rural Financial Service Mechanism of Rural Commercial Banks," requiring rural commercial banks to continuously enhance their distinctive, specialized, and refined capacity and level in serving the "three rural" sectors.
Since last year, the state and regulatory authorities have issued a series of policies and specific support measures to strengthen financial services for the "three rural" sectors. It is believed that with the continuous implementation of these policies, the problem of farmers having difficulty obtaining loans will be gradually alleviated.
Skillfully Use Fiscal Funds to Attract Living Water
In the agricultural support and protection policy system, fiscal and financial measures have significant synergistic effects. Only when fiscal agriculture-supporting policies amplify their effects through financial leverage can they meet the funding needs of modern agricultural development
For the Xinye Agricultural Machinery Cooperative in Liumaowan Town, Xinjiang, a major event last year was leasing 5 cotton pickers through financial leasing. One cotton picker is worth 3.2 million yuan. If relying only on the cooperative, it would be an expenditure difficult to bear. Through financial leasing, no collateral is needed, and the cooperative only needs a 30% down payment to drive the cotton pickers back. Zhu Qingjiang, chairman of the cooperative, said: "Not only that, after paying off the remaining 70% after 3 years, we can obtain ownership of the agricultural machinery from the leasing company. Although the interest over 3 years is nearly 500,000 yuan, as a financial agriculture-supporting pilot project of the Ministry of Agriculture, the Ministry of Agriculture will provide full interest subsidy, and at the same time we can also enjoy a 400,000 yuan subsidy for agricultural machinery purchase, saving 900,000 yuan at once."
Last year, the Ministry of Agriculture chose to launch pilot work on agricultural machinery financial leasing in Xinjiang and Guangxi, providing fiscal subsidies for the interest portion of financial leasing companies' agricultural machinery leasing business. By innovating the use of fiscal funds, the cost for farmers to purchase agricultural machinery was greatly reduced.
Li Jianhua, director of the Department of Finance of the Ministry of Agriculture, said that in recent years, the central government's fiscal authorities have launched and implemented a number of direct subsidy and direct investment subsidy projects, providing strong support for agricultural and rural economic development, but some policies have also shown problems of diminishing effects and low returns. At this time, it is necessary to innovate fiscal agriculture-supporting methods, use fiscal funds to leverage financial capital, and improve the efficiency of fiscal fund use.
In Li Jianhua's view, in the agricultural support policy system, fiscal and financial measures have significant synergistic effects. Fiscal agriculture-supporting policies amplify their effects through financial leverage and can meet the funding needs of modern agricultural development; only with fiscal support in the agricultural field can finance achieve effective risk control and reasonable cost compensation, and be transformed into a real financial force supporting agricultural development.
In recent years, various localities have explored several models in which fiscal funds leverage financial support for agriculture. Some localities weave an agricultural credit guarantee network by supporting or directly establishing guarantee institutions, provide guarantees for eligible agricultural credit needs, and mainly help solve the problem of farmers having "difficulty obtaining loans." Some localities use fiscal and tax policies to compensate financial institutions for the business costs of issuing agricultural credit under certain conditions and to provide certain risk compensation, mainly solving the problem of being "unwilling to lend," among others.
Agricultural departments will also carry out innovative exploration pilots in which fiscal measures promote financial support for agriculture in some fields and some regions, promoting the realization of the "two-wheel drive" of fiscal agriculture support and financial agriculture support, so that farmers no longer worry about money.