The livestock financing challenge requires joint efforts from multiple parties to solve

As the saying goes: “Wealth of ten thousand strings, but livestock with fur does not count.” Because of the disease and death risks of poultry, the mortgage risk of live livestock is greater than that of ordinary property mortgages, and therefore its collateral value is not high. But precisely because live poultry farming needs to expand its scale, and bringing in a source of fresh capital is no easy task, in the practice of leapfrog development in livestock breeding, shortages of funds and difficulties in financing often become bottlenecks restricting development, and solving this problem still requires joint efforts from multiple parties.

The live poultry mortgage experience of the Xinbao Livestock Breeding Cooperative in Wutong Town, Regiment 102, Division 6 of the Xinjiang Production and Construction Corps has set an excellent development example for us. By bringing in insurance companies, guarantee companies, third-party supervision companies and other institutions with risk protection functions, the cooperative guides breeding enterprises, cooperatives and farmers to use the live livestock they raise as collateral and obtain bank loans after guarantees. This method is divided into two steps: employees or enterprises first insure the live poultry they raise, and then use the insurance package to obtain loans from banks. Because of the bottom-line role of insurance, the risk of bank lending is reduced, and the financing channel is thus opened. Of course, in this example, the leading and supporting role of special funds played an important part. By having various carriers bear a certain proportion of insurance premiums, the threshold for mortgage loans for owners of live livestock was lowered, thereby achieving the groundwork and guidance role for financing.

⟦NL> Setting insurance as a prerequisite is an effective attempt. Through local governments establishing special funds, the door to financial financing has been pried open with the small lever of insurance, but this is not the only route to financing. Under the increasingly organized, cooperative and enterprise-based situation of the livestock industry, achieving bundled and mutual guarantee should become the leading form. Through government funding and the participation of herders and livestock enterprises as shareholders, establishing guarantee companies or forming guarantee funds can open a regional and distinctive financing path, and through the rolling and amplifying effect of financing guarantee funds, it can effectively expand guarantee coverage and dilute the occasional risks of livestock epidemics, with strong feasibility. Likewise, in major livestock provinces across the country, by establishing livestock guarantee reserve funds from the top down, together with supporting financial policy such as central government fiscal subsidies, tax incentive policies, lower special loan interest rates and higher loan limits, this will certainly greatly help broaden livestock financing channels.

Of course, supporting measures, especially corresponding supervisory measures, are indispensable: First, the risk of financial guarantees. Although financing guarantees have an amplifying effect, the safety of the capital chain must be followed up, and the risks of fabricated insurance fraud and misappropriation and embezzlement of special funds must be strictly prevented. This requires strengthening the closed nature of special funds and doing a good job at the entry gate and the capital flow gate. Second, large-scale disease and epidemic outbreaks must be prevented. When signs of an epidemic are discovered, personnel should be organized promptly for rescue and isolation should be established to prevent capital risks caused by the depreciation of collateral due to large-scale epidemic outbreaks.

In addition, joint guarantees through the upstream and downstream industrial chains of the livestock industry are also an effective financing method; through coordination by local governments, activating bank microcredit measures, and even encouraging private capital to “turn loans into investments” and take shares in livestock enterprises, all of these can be called beneficial attempts in livestock financing. But in the final analysis, it still depends on the sound and scientific operation of the livestock industry itself. Profit is often the compass of capital. With profit assured, capital falling into place is only a matter of time and method.