The career rise and fall of a star farmer sounds a warning bell
The direct cause of "star farmer" Lu Guoping's failure was blind expansion and neglect of operational risks, which led to a rupture in his capital chain. But behind this lie underlying weaknesses in the development of some professional farmers: outdated management concepts, a lack of professional management talent, and low personal professional quality.
From a model professional farmer operating 60,000 mu (about 4,000 hectares) and with annual revenue exceeding 100 million yuan, to a "cliff-edge" collapse of his business and more than 100 million yuan in debt, "star farmer" Lu Guoping of Jiangxiang Town, Nanchang County, Jiangxi, is on the brink of bankruptcy.
What lessons does Lu Guoping's experience hold for new-type agricultural operating entities that are in a period of transformation and upgrading? Yin Xiaojian, deputy director of the Rural Economy Research Institute of the Jiangxi Academy of Social Sciences, said that today's "professional farmers" have accumulated a certain amount of experience and capital through earlier land transfers and operations. But they still suffer from defects such as pursuing quantity, neglecting quality, and poor risk control capabilities.
Experts suggest that as professional farmers, they should promptly seek upgrades in their own management capabilities and industrial development, avoid inefficient expansion, focus on quality development, and improve their ability to avoid risks.
Capital chain rupture: an "agricultural kingdom" collapses in three years
In 2012, at the peak of his career, Lu Guoping, a farmer from Jiangxiang Town, Nanchang County, Jiangxi, held eight national- and provincial-level honorary titles, including "National Model Worker," "National Grain-Growing Pacesetter," and "Jiangxi Province Outstanding Contribution Talent." In the eyes of local people, Lu Guoping was a "star."
At that time, Lu Guoping's Jiangxi Guowang Industrial (Group) Co., Ltd., an agricultural industrialization company oriented toward efficient planting and breeding demonstrations, agricultural eco-tourism, agricultural product processing services, and agricultural socialized services, was a benchmark and banner for Jiangxi's agricultural industrialization development. The company had more than 500 employees, a total operating area of 65,000 mu (about 4,333 hectares), and annual revenue of nearly 200 million yuan.
Recently, the reporter met Lu Guoping again. After subleasing assets to repay debts, the businesses he personally operates now consist only of a special fish farming base of just over 1,000 mu (about 67 hectares), with fewer than 50 employees remaining. The company's office premises are tightly locked and desolate. According to incomplete statistics, Lu Guoping's Guowang Company and related agricultural industrialization companies owe more than 80 million yuan in outstanding bank principal and 150 million yuan in private loans.
"In 2013 the capital chain broke, and there was no money to buy feed. These are the 'yellow catfish' we put in back then, and after three years they still haven't reached 10 cm. Many people used to visit the company, but no one has come for a long time." From a "model" of farmer entrepreneurship to a "cliff-edge" decline, standing in the only remaining farming base, Lu Guoping spoke in a low voice.
Lu Guoping's story has to start from 1999, when he abandoned business for farming. Jiangxiang Town, located by Poyang Lake, is a famous "land of fish and rice" in Jiangxi. But at the end of the last century, due to backward farming methods, heavy agricultural tax burdens, and the rise of the migrant labor wave, quite a lot of local farmland was left fallow.
In 1999, Lu Guoping keenly sensed the business opportunity of agricultural industrialization from the large-scale mechanized farming operations of developed provinces. He returned to his hometown of Jiangxiang Town, Nanchang County, and transferred 1,080 mu (about 72 hectares) of paddy fields in the village at a price of 200 yuan/mu, becoming one of the earliest "professional farmers" in Jiangxi to farm on a large scale with full mechanization. Jiangxi Guowang Industrial (Group) Co., Ltd., established in 2003, was Jiangxi's first company to operate more than 10,000 mu of farmland and to run agricultural production under a corporate model, developing diversified operations including planting and breeding, agricultural product wholesale, and import and export.
Tu Yongxin, deputy general manager of Guowang Company, said that before 2010, Lu Guoping on the one hand gradually expanded large-scale agriculture, reaching a planting and breeding scale of 60,000 mu in 10 years and achieving diversified operations and deep processing of rice, fruits and vegetables, and aquaculture; on the other hand, he began to set his sights on rural leisure tourism. In 2011, Lu Guoping divided the industry plan into four major parts: efficient planting and breeding demonstrations, agricultural product processing, agricultural socialized services, and agricultural eco-tourism, and prepared for a shareholding reform and listing.
"During this period, the state abolished the agricultural tax and increased investment and policy support for agriculture, and the company developed very smoothly," Tu Yongxin said. In May 2009, at the National Agricultural Comprehensive Development Work Conference, Guowang Company's farm became an on-site inspection point. In November of the same year, some media promoted him together with Huaxi Village and Xiaogang Village as a model of rural reform and innovation, and Lu Guoping and his Guowang Company became a benchmark for agricultural industrialization development. By the end of 2012, Lu Guoping's career had reached its peak.
Tu Yongxin said that just then the company encountered a crisis. In the process of industrial expansion, Lu Guoping continuously invested the money he had earned earlier and a total of 240 million yuan in bank loans into agricultural infrastructure construction. By 2013, the company needed to repay 20 million yuan in due loan principal and interest every month. But as the national economic situation declined, banks tightened credit, and Lu Guoping's capital chain quickly ruptured.
According to Lu Guoping's own calculations, between 2013 and 2014 he repaid a total of 200 million yuan in bank loans, basically draining his cash flow. At the same time, he also owed 150 million yuan in private loans, and the company fell into difficulty because it had no money to operate.
Compared with the deteriorating business performance, what is even more worrying is that some local people, agricultural department supervisors, and banks all mentioned that Lu Guoping was suspected of using borrowed funds for gambling overseas.
The "threefold failures" behind the fall of a "star farmer"
On the surface, the "cliff-edge" collapse of Lu Guoping's agricultural production and operations was because the bank "turned hostile," causing the capital chain to rupture. In reality, what lies behind this are shortcomings such as blind expansion by professional farmers, poor business management and organization, low professional quality, and hidden moral hazards in operations.
"The good development momentum in the early period made everyone ignore operational risks," Lu Guoping said. After becoming a model, he could not stop expanding, and the government would not allow us to stop either. Whatever policies were available were given to us, and in the end all the projects that could be launched were launched. Lu Guoping also became a "hot favorite" in the eyes of many commercial banks, which competed to lend to him.
Focusing only on scale and ignoring quality, the expansion brought enormous risks. Tu Yongxin said that for the more than 1,500-mu (about 100-hectare) hundred-fruit orchard, because the production cycle was long, the investment was wasted before there was even any return. In order to expand, Lu Guoping kept borrowing from banks and successively invested about 300 million yuan in infrastructure construction. The single project of the 5,000-mu (about 333-hectare) special fishery farming base alone took 125 million yuan. Yet all bank loans were one-year loans, with short cycles and high interest, unable to adapt to agricultural production with long investment cycles.
A lack of professional talent and insufficient innovation were also important reasons why Lu Guoping fell into difficulty and found it hard to extricate himself. "Most of those who started the business with me were old friends and brothers with a low level of education, and they lacked advanced management capabilities," Lu Guoping said. In 2010, he wanted to carry out a shareholding reform of the company to form an operating system linking benefits with employee income, but under everyone's opposition it came to nothing.
"In 2012, Guowang Company hired a group of management talents externally at an annual salary of 300,000 yuan, but they were unfamiliar with how agricultural enterprises should operate and manage. This group left after staying for a year and did not play a role in helping the enterprise get out of difficulty," said Hu Yuening, another deputy general manager of Guowang Company.
In addition to blind expansion and business management factors, personal quality and credit risk were also important reasons for Lu Guoping's failure. A series of credit reports on him by one of his main financing banks, which the reporter obtained, showed that in 2012 Lu Guoping continuously defaulted on bank loans. Post-loan inspections found that during the credit period Lu Guoping had a large amount of private lending, reportedly because Lu Guoping was suspected of participating in gambling overseas. During the same period, some guarantors were no longer willing to guarantee Lu Guoping's loans, and other banks also successively began recovering Guowang Company's loans.
Investigations by relevant financial institutions also showed that from 2012 to 2014, Lu Guoping made 46 trips to Macao, China, including 33 trips in 2012.
The reporter's review found that starting in 2013, there were successive records of creditors applying to courts for compulsory enforcement of Lu Guoping's due loans.
In response, Lu Guoping said that he had indeed been to overseas casinos while accompanying clients and company personnel on trips. "But the stakes were relatively small and would not endanger the company's operations."
"Professional farmers" urgently need transformation and upgrading
Lu Guoping's company was named "Guowang," implying that the company would prosper together with the country. "At that time, 'heaven helped and people were willing to work hard,' and it was truly glorious. Thinking about it now still makes my blood boil," Lu Guoping said. Recalling that period of rapid expansion, he still showed excitement he could hardly conceal.
Employees still holding on at the company said they are working hard and hope to escape difficulty and develop again. "The company's predicament was caused by decision-making mistakes," said Lu Guoping's younger brother Lu Liping, adding that since the company existed when it was founded, he could not leave when it fell into difficulty.
However, for Lu Guoping to "make a comeback" now, he faces a new situation of accelerated rural land transfer and agricultural industry development.
At present, Lu Guoping has successively subleased more than 10,000 mu (about 667 hectares) of paddy fields at a price of 800 yuan/mu for two years, and adopted prepaid rent to resolve more than 7 million yuan in overdue farmland rent and his own operating capital gap; more than 40,000 mu (about 2,667 hectares) of aquaculture lake surface was subleased to other agricultural enterprises; and the more than 5,000-mu (about 333-hectare) special aquatic products base is being contracted out for operation by him and more than 50 old employees of the company.
Lu Guoping said that drawing lessons from the past, he is now fully devoted to production management and focused on farming special aquatic products. At the same time, he is discussing with the local village committee the matter of extending the land transfer contract, and preparing to cooperate with other technology enterprises, with the other party making the early investment to develop a "fishery-solar power generation" project to increase water-surface farming income. "Once operations improve, I will take back the businesses that were subleased," Lu Guoping said.
However, if Lu Guoping wants to recover, he faces one of the biggest difficulties. The reporter learned that of the more than 20,000 mu of farmland he transferred earlier, 1,300 mu was long-term transferred land, 3,000 mu will expire within 10 years, and most of the farmland will expire within 5 years.
A local agricultural bureau official said that when Lu Guoping signed the farmland transfer contracts, the transfer price was about 250 yuan/mu, but now the local farmland transfer price has reached about 600-800 yuan/mu, and the pressure on him to continue transferring and contracting will be very great.
Yin Xiaojian said that China's agricultural production is in a period of transformation and upgrading, and "professional farmers" should promptly seek upgrades in their own management capabilities and industrial development, avoid inefficient expansion, focus on quality development, and improve their ability to avoid risks. At the same time, they must also improve credit awareness and personal quality.
"At the same time, the government should also establish dynamic tracking management and assistance mechanisms to provide targeted guidance and solutions to the problems and difficulties in the development of professional farmers. But it must prevent 'disdaining the poor and favoring the rich,' and even, for the sake of political achievements, continuously using tilted government policies to 'build up big households,' which leads to concentrated risks," Yin Xiaojian said.