Farmers no longer face difficulty getting loans; they can apply as long as they have a guarantee or collateral
“The cooperative has more than 500 farmer households holding shares and over a thousand mu of land contributed as shares. It produces high-quality waxy corn and engages in contract farming. Industrialized development requires a large amount of capital. Previously, because there was no collateral, it could not get loans from banks and often had to resort to private lending, which carried high interest and high risk.” In Beibei District, Chongqing, Tang Chaofu, chairman of the Lüboyang Crop Share Cooperative in Jindaoxia Town, said that at every farming season, a large amount of capital is needed to buy seeds and fertilizer, and the annual funding gap is always more than 1 million yuan. “It really worries people to death.”
This situation is not an isolated case. Chongqing Wulong County Gangfeng Agricultural Development Co., Ltd. invested in building its own cold-chain logistics center, and the vegetables it produces are supplied daily through the cold chain directly to the Hong Kong, China market. However, because the agricultural buildings, land and mechanical equipment cannot be mortgaged, the company still finds it difficult to obtain loans.
Due to the lack of collateral and financing guarantees, the difficulty new agricultural operators face in getting loans has become an important factor restricting the development of agricultural industrialization and marketization and the improvement of comprehensive agricultural production capacity. However, this situation is undergoing a fundamental change in Chongqing. With the continuous advancement of the city's rural financial reform, local farmers have entered a “new era of financing guarantees.”
Agricultural Guarantee Company: A bridgehead for financial support to agriculture
“Before, I saw on TV that one could get a loan to raise cattle. When I went to the bank in the county to ask, they all said it was no good because I had no collateral. Now it is easy. With a guarantee from Chongqing Agricultural Guarantee Company, I got a loan of 300,000 yuan last year, expanded my cattle-raising scale, and made a net profit of more than 200,000 yuan. This year I repaid the loan and renewed it for 200,000 yuan, and added some more calves.”
Commentary
Ma Jiujie, executive deputy director of the China Rural Economy and Finance Institute (Center) at Renmin University of China: Chongqing Agricultural Guarantee Company has given play to its professional advantages in agriculture. First, it can more accurately identify risks and screen promising industries, projects and business entities; second, it innovates counter-guarantee measures by setting agricultural land management rights, biological assets, production equipment and other things that banks cannot or are unwilling to accept and find difficult to dispose of as counter-guarantee collateral; third, it carries out packaged guarantee loans based on the agricultural industry chain, using the advantages of industrial clustering to develop “factory-style” guarantee services; fourth, it cooperates with industry associations, fully leveraging the associations' advantage of being relatively familiar with the industry and enterprises to identify and control borrower risks and reduce transaction costs and guarantee risks. Through the agricultural guarantee company, on the one hand, bank loans have been leveraged, increasing the credit availability of farmers and new agricultural operators; on the other hand, a customer group with a credit foundation has been cultivated for banks.
Liu Yejiang of the Lefeng Livestock and Poultry Breeding Professional Cooperative in Canggou Township, Wulong County, told the reporter happily.
Those who successfully obtained loans with the help of Chongqing Agricultural Guarantee were not only individual farmers like Liu Yejiang. The Jindaoxia Crop Professional Cooperative in Beibei District once successfully secured 500,000 yuan in guaranteed financing with the support of Chongqing Agricultural Guarantee, further expanding the cooperative's corn planting base. At present, the number of growers driven by this cooperative has exceeded 600 households. The Pepper Industry Association in Jiangjin District, through the financing guarantee of Chongqing Agricultural Guarantee, has obtained a cumulative total of 110 million yuan in loans from banks, mainly used for pepper purchasing, processing and circulation, powerfully boosting the development and growth of the pepper industry.
⟦NL> As the only financial pilot unit of the Ministry of Agriculture, “Chongqing Agricultural Guarantee” has the Chongqing Municipal Agriculture Committee as the representative of the investor and is responsible for management and policy business guidance, while the Municipal Finance Bureau is responsible for fund use and financial supervision. It mainly provides financing guarantees for agriculture-related business entities. In accordance with the principles of “government leadership, market operation, social participation, and service to agriculture,” it gives priority to serving agricultural enterprises, farmers' professional cooperative organizations and large growers in key agricultural industries and distinctive advantageous planting and breeding industries.
“The involvement of Chongqing Agricultural Guarantee has effectively alleviated the predicament of insufficient effective collateral for agriculture-related enterprises and farmers. At present, the agricultural guarantee business covers 38 districts and counties, with coverage reaching 100%, and has cumulatively leveraged 6.1 billion yuan in bank funds into the ‘three rural’ sector. The leverage amplification effect of fiscal funds has reached nearly 20 times. The industries involved include planting, breeding, agricultural product circulation and land consolidation and reserve and other agriculture-related fields, and strategic cooperative relationships have been established with many banks and districts and counties.” Tang Wenzhi, chairman of Chongqing Agricultural Guarantee, told the reporter that, according to the different circumstances of guarantee recipients, a series of guarantee products and operating methods have been provided. For example, specifically targeting the characteristics and development needs of farmers' professional cooperatives, it innovatively developed the “Spring Rain Series” guarantee products; it carried out property rights mortgage loans to revitalize “sleeping” rural resources; and it innovated counter-guarantee measures, actively exploring solutions to the agricultural problems of “difficult and expensive financing.”
Through continuous innovation in financing guarantee measures, the breadth and depth of financial support to agriculture have been broadened, powerfully boosting the development of modern agriculture and agriculture with distinctive benefits, and effectively driving the sustained growth of farmers' incomes. According to incomplete statistics, in recent years the agricultural business entities that obtained guaranteed loans through Chongqing Agricultural Guarantee increased their average sales revenue by 19% and their profits by 25%.