Financial leasing eases farmers' difficulty in buying machinery, agricultural mechanization rate develops unevenly

In recent years, the role of mechanization in China's agricultural modernization has become increasingly obvious. However, in some fields, due to a shortage of funds, there still exists the phenomenon that farmers cannot afford to buy machinery. How to cultivate the rural financial market and innovate financial methods to support the development of agricultural mechanization has become very urgent. Recently, a reporter interviewed Li Weiguo, director of the Agricultural Mechanization Department of the Ministry of Agriculture, on related issues.

Reporter: At present, China's agricultural mechanization rate has exceeded 60%, but development is still very uneven. In your view, which areas still need to be strengthened?

Li Weiguo: This year, the comprehensive mechanization level of plowing, sowing and harvesting of China's crops is expected to exceed 61%, and last year it was 59%. In previous years, the main focus was on solving the mechanization of plowing, sowing and harvesting for some bulk crops, especially grain crops, but there are still some links where the level of mechanization is relatively low, such as post-production drying, and the mechanization level of some livestock farming is also relatively low. Therefore, although our country's agricultural mechanization level has generally reached an intermediate stage, development is very uneven. For example, the comprehensive mechanization rate of wheat has already reached more than 90%. Compared with grain crops, the mechanization level of cash crops is relatively low, such as cotton, oil crops, and sugarcane. The average mechanization level of the three links of sugarcane plowing, sowing and harvesting is about more than 40%, but mechanical sowing is probably only 20%, and mechanical harvesting has just started, with only a few hundred thousand mu of mechanically harvested area nationwide.

Therefore, in the next step, first, we must continue to promote full-process mechanization of major key crops, such as the full-process mechanization of grain, cotton, oil and sugar crops; second, we must focus on promoting comprehensive mechanization, not only in planting but also in livestock farming, forestry and fruit farming, primary processing and other industries. Some original crop varieties, planting methods and planting agronomy are not compatible with mechanized operations. For example, the row spacing for sugarcane planting used to be dense, narrow-row planting, but now machine operations require wide-narrow row planting, with row spacing required to reach more than 1 m to 1.2 m. Under such circumstances, it is necessary to accelerate the breeding of varieties suitable for machine operations and improve cultivation methods as soon as possible.

Reporter: Taking sugarcane as an example, if mechanized harvesting does not make a breakthrough, what impact will it have on the entire industry?

Li Weiguo: Taking sugarcane as an example, if mechanization does not make a breakthrough, our production costs will be too high. Now the labor cost of harvesting one mu of sugarcane may be five or six hundred yuan. At a yield of 5 tons per mu, if manual cutting of one ton of sugarcane costs 100 yuan, that is 500 yuan, and for a yield of more than 4 tons it is more than 400 yuan. The cost of mechanical harvesting of one mu of sugarcane abroad is about 200 yuan, and some can even be harvested for more than 100 yuan. This gap is very large. If the problem of mechanized sugarcane production is not solved, our sugarcane production will have no competitive advantage in terms of cost, and more importantly, in the future no one will be willing to engage in such heavy physical labor. If this industry continues like this for a long time, it will inevitably shrink and inevitably exit.

Reporter: Mechanization of agricultural production is becoming more and more urgent, but some machinery is expensive, and the funding bottleneck has always been a problem. In your view, besides purchase subsidies, what other methods or channels can alleviate this problem?

Li Weiguo: From the current situation, with the acceleration of China's industrialization and urbanization and the acceleration of the transfer of rural labor, two trends have emerged: one is that the trend of machines replacing manual operations in agricultural production is becoming more and more obvious. It can even be said that industries that cannot use machines to replace labor in the production process will have their competitiveness directly affected. It can also be said that if some industries cannot solve the problem of machine operations for a long time, they may become a historical and cultural heritage. Another trend is that in the entire development process of agricultural machinery, the development of high-performance, intelligent and specialized large-scale equipment is a trend, and it will gradually replace the original simplified, low-performance and single-purpose machinery.

This brings about a problem: the performance of machinery is getting higher and higher, and the price of machinery is also getting higher and higher, and there is a phenomenon that many agricultural producers and farmers cannot afford to buy it. Although the state has agricultural machinery purchase subsidies and other support policies, due to the limitations of farmers' income at the current stage, some agricultural machinery and equipment still cannot be afforded by farmers, and it is urgent to solve this through innovative agricultural machinery financial service methods and the development of diversified financing channels. Developing financial leasing for agricultural machinery is an important solution.

The agricultural machinery financial leasing business has a history of several decades in European and American countries. According to a survey by the Equipment Leasing and Finance Association of the United States, the amount of financial leasing of agriculture, forestry, animal husbandry and fishery equipment in the United States is as high as about 20 billion US dollars each year. It is a main way for some large farm owners in the United States, including some medium-sized farm owners, to purchase agricultural machinery and tools, and the situation in some European countries is also the same. Purchasing large agricultural machinery and equipment through financial leasing can greatly reduce the pressure of farmers' one-time investment.

In China, active exploration has also been carried out in recent years. For example, in Heilongjiang, Xinjiang, and some other places, financial leasing activities for agricultural machinery have also been carried out. In the past two or three years, some good momentum and good signs have also appeared, and some experience has been explored. From the current point of view, to solve the problem of farmers' difficulty in purchasing machinery, perhaps in addition to direct state support, more use should be made of financial means and financial fundraising to solve this problem. One very important method is financial leasing.

Reporter: What kind of concept is agricultural machinery financial leasing? Li Weiguo: Agricultural machinery financial leasing means that the financial sector helps purchase agricultural machinery on behalf of customers according to their needs, so as to solve producers' funding difficulties. For example, if you need a tractor or a harvester, you have no funds but you urgently need it, then you go to a financial leasing institution, and they buy it according to your wishes and needs. Whatever model, manufacturer or brand you want to buy, they help you buy it first, and you also need to pay a down payment according to a certain proportion. The purchased equipment first belongs to their leasing company, and you sign a contract with them. After a few years, when you have repaid their money, they then transfer ownership of the machine to you.

Reporter: What forms of agricultural machinery financial leasing are there? Li Weiguo: There are many forms of financial leasing abroad. The one mentioned above is the main form, and there are also some financial leasing policies introduced by agricultural machinery companies. For example, some large agricultural machinery manufacturers, in order to promote their own agricultural machinery products and solve the problems of farmers' difficulty in purchasing machinery and inability to afford machinery, provide farmers with a financing plan. You take it and use it first, or you pay me a certain percentage first, then I lease it to you, and after you finish paying in two or three years, I will transfer all the property rights of the machine to you. There are relatively many forms and entities of financial leasing abroad. In China, some large agricultural machinery manufacturing enterprises have also begun to explore, such as Foton and Chery, which also began exploring last year. More are some specialized financial companies doing this work, including ABC Leasing, including Harbin Bank, and also CreditEase Leasing Company. Their main purpose is to solve the problem of farmers' shortage of funds for purchasing machinery and achieve mutual benefit and win-win results for financial enterprises, agricultural machinery enterprises and farmers purchasing machinery.