In the process of agricultural scaling, management capacity must be improved in tandem
The rapid downfall of a "star farmer" is lamentable and thought-provoking. How to promote the healthy development of large-scale operations by new types of business entities is not only a practical issue that every "Lu Guoping" needs to consider, but also a question of the times worthy of reflection by society as a whole. Only those new types of business entities that can seize opportunities, avoid risks, and continuously strengthen capacity building can carve out a path in the turbulent market and ride the tide of the times.
From a model professional farmer operating 60,000 mu (about 4,000 hectares) and generating annual revenue of over 100 million yuan, to being saddled with over 100 million yuan in debt and suffering a "cliff-like" collapse of his business, "star farmer" Lu Guoping of Jiangxiang Town, Nanchang County, Jiangxi Province, is on the brink of bankruptcy. Recently, the career rise and fall of "star farmer" Lu Guoping has sparked heated discussion. On the surface, the collapse of Lu Guoping's business was due to a broken capital chain, but behind it lie such weaknesses as blind expansion, poor management and organization, low professional competence, and hidden moral hazards in operations.
A thousand-mile dike is destroyed by an ant hole. The collapse of Lu Guoping and his Guowang Company was a concentrated eruption of long-accumulated problems. In fact, Lu Guoping was not unaware of the problems. As early as 2010, Lu Guoping wanted to carry out a shareholding reform of the company to link benefits with income and incentivize employees, but it came to nothing amid everyone's opposition. When scale goes up but management does not, one will inevitably face the moral hazard problem of agricultural operations; if employees lack motivation, it will inevitably affect agricultural production efficiency. This is probably also a common problem faced by most large-scale agricultural operations.
Developing large-scale agricultural operations must be accompanied by standardized management that matches one's own development. When many family farms move toward scaled operations, they often stumble, or even take a fall, because their management level is insufficient. In recent years, agricultural departments have been strengthening training for new types of business entities, one purpose of which is to enhance their standardized management capabilities, giving them a leg up and seeing them through the early stage of their business development. But "star farmers" like Lu Guoping have in fact already passed the early stage of business development, yet still saw their business collapse due to poor management. This also shows that in large-scale agricultural operations, management must advance with the times and be continuously improved, with no relaxation whatsoever.
In the process of engaging in agricultural production and operations, one may suffer various uncertainties that lead to losses. The risks brought by such uncertainties may be natural, such as a drought or flood disaster; may be market-related, such as a huge price fluctuation; may be policy-related, such as the state's establishment of standardized standards for the development of a certain industry; or may be financial, such as the broken capital chain of Guowang Company. Large-scale agricultural operations need the support of financial capital, but banks are, after all, not agriculture's own reservoir, so one must reasonably assess one's own development and the financial support one can obtain.
In the process of long-term deep cultivation of agriculture, attention must be paid to risk prevention. Why can traditional family farming better cope with financial risks? On the one hand, it is because of the diversity of family operations, not putting all eggs in one basket: if agriculture suffers a disaster, there is still income from working elsewhere to make up for it. On the other hand, it is also because family operations have a higher awareness of vigilance against financial risks and do not place family operations under the dangerous wall of mounting debt. Seizing a fleeting expansion opportunity is certainly important, but one must also reasonably assess the various risks brought by scale expansion, and not suffer indigestion because of blind expansion and neglect of risks. Bank funds seek advantage and avoid harm. When a new type of business entity has obtained bank credit favor through development, it should all the more reasonably plan industrial development and use funds rationally, and not be dazzled by the enthusiastic scene of banks competing to grant credit, rushing ahead regardless of risks and planting hidden dangers for development.
In fact, risks such as those brought by expansion and long-term investment are not hard for people truly engaged in agricultural production to discover. What is dangerous is that the star leader, at the critical moment of decision-making, is dazzled by the momentum of rapid development and at the same time lacks relevant restraint mechanisms. If there were genuine "old farmer" partners or professional management talent who could seriously lay out these risks, opportunities, strengths, and weaknesses for Lu Guoping, such risks could be avoided to a certain extent. All of this reminds new types of business entities to strengthen capacity building for star leaders and build restraint mechanisms. As for the suspected loophole of Lu Guoping using borrowed funds to gamble overseas, although it is an individual case, it further shows that it is even more urgent for new types of business entities to strengthen fund management - without standardized financial management, the edifice of large-scale operations cannot be firmly built.
On the other hand, it must also be seen that the downfall of a "star farmer" does not mean the failure of large-scale operations, nor does it show that "big is necessarily not beautiful." Scaled operations are the direction of modern agricultural development. This decisive direction is determined not only by the characteristics of agriculture's own economies of scale, but also by the inevitable result of China's agricultural labor force continuously transferring to cities and industry. Scaled operations are an inevitable direction, but not every scaled operation is bound to succeed. Only by finding standardized management, echelon building of talent teams, and investment and operation models that match scaled operations can scaled operations advance along the correct path.
From once resolving to "never be a farmer for a lifetime" to being hailed as a benchmark of new-type farmers, and then to the rapid downfall of a "star farmer," Lu Guoping is lamentable and even more thought-provoking. Agriculture is a hot land for investment full of infinite opportunities, and at the same time there are all kinds of risks. How to promote the healthy development of large-scale operations by new types of business entities is not only a practical issue that every "Lu Guoping" needs to consider, but also a question of the times worthy of reflection by society as a whole. Only those new types of business entities that can seize opportunities, avoid risks, and continuously strengthen capacity building can carve out a path in the turbulent market and ride the tide of the times.