4 million yuan leverages 170 million yuan in funding support for cooperatives
Editor's note: To solve the "difficult loan" and "expensive loan" problems faced by cooperatives, the Ministry of Agriculture launched a pilot program for loan guarantee premium subsidies for cooperatives in Beijing, Hubei, Hunan, Chongqing and other provinces and municipalities starting in 2014, giving full play to the "four ounces moving a thousand catties" leverage effect of fiscal funds to mobilize financial capital support for cooperatives.
In carrying out the pilot program for guarantee premium subsidies, Chongqing not only mobilized the enthusiasm of policy-based agricultural financing guarantee institutions and lowered the financing threshold and risks for cooperatives, but also explored a new model of "converting subsidies into investment" for fiscal fund input, attracting more social capital to support agriculture.
In late August, the Huizhong Watermelon Cooperative in Canggou Township, Wulong County, Chongqing, was bustling with activity. Several trucks were parked beside the melon sheds, and melon farmers were busy loading watermelons onto the vehicles. Looking at the thriving base, cooperative head Ye Zhongyu said: "Without Chongqing Agricultural Guarantee Company, there would be no cooperative today." The cooperative currently has more than 1,500 members, a base area of about 10,000 mu, an annual output of 25,000 tons of watermelons, and an output value of about 25 million yuan.
Ye Zhongyu's words are no exaggeration. In 2014 and 2015, the base's watermelons suffered total crop failure due to disasters, and the cooperative pulled through with more than 1.6 million yuan in guaranteed loans; this year, after being hit by heavy rain, the base was able to rebuild with a 380,000 yuan guaranteed loan. Huizhong is not the only cooperative that has solved its financing difficulties thanks to the support of the agricultural guarantee company.
In Chongqing, as of the end of 2015, the pilot program for loan guarantee premium subsidies for cooperatives had cumulatively provided 4 million yuan in guarantee fee subsidies, leveraging 175.35 million yuan in bank credit funds to support cooperative development, amplifying central fiscal funds by 43.84 times. Chongqing Agricultural Guarantee Company reduced financing costs for each farmers' cooperative by an average of 27.7% last year, and these cooperatives' sales revenue increased by 35.1% compared with before obtaining loan guarantees, directly driving thousands of farming households to increase their incomes.
What kind of mechanism stimulates the enthusiasm of agricultural guarantee companies, what measures are used to mobilize social financial capital to support agriculture, and what means are used to prevent financial risks? A responsible person from the Chongqing Municipal Agriculture Commission told reporters: "Multi-party coordination is the key to ensuring the smooth implementation of the pilot program."
Policy-based guarantee companies take the lead: building agricultural finance liaison stations, innovating counter-guarantee measures
Chongqing's pilot program for loan guarantee premium subsidies is implemented jointly by government agencies, guarantee companies and financial institutions. The government provides premium subsidy funds, Chongqing Agricultural Guarantee Co., Ltd. provides guarantees for cooperative loans, cooperatives enjoy full premium subsidies, and banks provide centralized credit lines and issue loans to cooperatives.
Founded in 2006, Chongqing Agricultural Guarantee Co., Ltd. (abbreviated as Chongqing Agricultural Guarantee) is a policy-based professional agricultural financing guarantee institution, with the Chongqing Municipal Agriculture Commission as the representative of the contributor and responsible for management and policy business guidance, and the Municipal Finance Bureau responsible for fund use and financial supervision. It mainly provides financing guarantees for agricultural business entities.
"The involvement of Chongqing Agricultural Guarantee has effectively alleviated the loan difficulties of agricultural enterprises and farmers caused by insufficient effective collateral." According to company chairman Tang Wenzhi, in 2015 alone, the company issued guarantee approvals for more than 90 farmers' cooperatives and provided guaranteed loans of 101.35 million yuan to 73 farmers' cooperatives. This year, the Ministry of Agriculture allocated 2.9 million yuan in subsidy funds, and in the first half of the year alone, the company had already raised more than 100 million yuan in financing for cooperatives.
"In the 10 years since its establishment, the company has developed a 'three-rights' mortgage financing guarantee loan model of 'government + guarantee + bank + farmers (agricultural business entities).'" Tang Wenzhi told reporters. Last year, the company set up agricultural finance liaison stations in all districts and counties of the city for the initial selection, recommendation and post-guarantee management of farmers' cooperative guarantee projects, which greatly shortened the cooperative financing service process. At the same time, in response to the seasonal and time-sensitive characteristics of cooperative guarantee needs, the company broke through departmental restrictions, set up working groups, and carried out batch investigation of cooperative guaranteed loan projects.
The innovation of counter-guarantee measures is another magic weapon of Chongqing Agricultural Guarantee in solving cooperative loan difficulties. The company tailors counter-guarantee measures for cooperatives, greatly enhancing their financing capacity through methods such as mortgage of farmers' land contract and transfer management rights, mortgage of biological assets, cooperative mutual guarantee, mutual guarantee among core cooperative members, and mortgage of above-ground attachments, management buildings, and greenhouse facilities and equipment.
In addition, Chongqing Agricultural Guarantee has also explored building risk fund pools for financing projects with major business district and county governments at a 1:1 ratio, providing risk protection for guaranteed loans to cooperatives and other new agricultural business entities, and greatly reducing their physical collateral counter-guarantee requirements.
Municipal fiscal funds provide backstop: increasing special investment, adding policy-based insurance
The Wanzhou District Nongjian Poultry Professional Cooperative, founded in 2007, is a beneficiary of the guarantee premium subsidy pilot program. This is a national-level demonstration cooperative providing "one-stop" services including poultry breeding technical training, and the procurement, distribution and sales of seedlings, feed and veterinary drugs. "Although the cooperative is not small in scale and its annual profit margin is guaranteed, its development has been hampered because it is difficult to obtain loans directly from banks," said Ding Shuqing, chairman of the cooperative.
After learning about the full subsidy for loan guarantee premiums, Ding Shuqing applied to Chongqing Agricultural Guarantee for a 2.4 million yuan guaranteed loan for working capital for livestock and poultry product sales. This loan quickly expanded the cooperative's business and drove members to generate nearly 300 million yuan in income. "With increased income, members are more cohesive, and the cooperative's development will be more promising," said Ding Shuqing.
According to a responsible person from the Chongqing Municipal Finance Bureau, the municipal finance department allocated 17 million yuan in special funds last year to support the development of farmers' cooperatives, of which 10 million yuan was used for the construction of demonstration cooperatives, 5 million yuan was used to support the development of 32 new rural shareholding cooperatives, and 2 million yuan was used to support 5 districts and counties in carrying out "agricultural cooperative connection" pilots. It is worth noting that Chongqing combines cooperative development with poverty alleviation, and in project selection, projects in poverty-stricken districts and counties account for more than 60%, thereby driving local farmers to escape poverty and become prosperous.
In addition, to reduce accidental losses in agricultural production, the Chongqing Municipal Finance Bureau has increased support for agricultural insurance, newly developing 3 policy-based agricultural insurance products including price index and land income new-type insurance products, bringing the total number of insurance types to 31. In 2015, the insured amount was 13.48 billion yuan, with 1.052 million households (times) of insured farmers, settled claims of 116 million yuan, and 175,000 households (times) of beneficiary farmers.
Multi-party innovation: establishing venture capital funds, cultivating agricultural and rural financial markets
To innovate the financial support system for new agricultural business entities and support the entrepreneurial development of farmers' cooperatives, Chongqing has explored a new model of "converting subsidies into investment" for fiscal equity investment. Led by the Chongqing Municipal Agriculture Commission, Chongqing Agricultural Asset Management Co., Ltd. (hereinafter referred to as "Asset Company") initiated and established a venture capital fund for new agricultural economic entities with an initial scale of 200 million yuan.
According to the head of the Asset Company, the venture capital fund is mainly used for farmland consolidation, farmland water conservancy and the creation of high-yield bases for major agricultural products, standardized breeding of livestock, poultry and aquatic products, production and operation projects of improved varieties for planting and breeding, and modern agriculture and high-tech agriculture projects such as modern seed industry, agricultural machinery and equipment manufacturing, facility agriculture, and deep processing of agricultural products. It increases support for farmers' cooperatives in expanding reproduction, upgrading consumption and independent entrepreneurship, and promotes the development of water-saving agriculture, circular agriculture and eco-friendly agriculture. In 2015, 19 farmers' cooperatives received fund investments totaling 65.1 million yuan.
Some experts pointed out that compared with the traditional direct subsidy method of fiscal funds, the venture capital fund amplifies the effect of the existing direct subsidy policy for fiscal funds, expands the number of beneficiaries and the scope of support, and is a new exploration of the fiscal fund input model, an important channel for policy implementation, and a new measure for building the rural financial system. In addition, the "investment + loan" model determined by the Asset Company and the head office of Three Gorges Bank (i.e., 30% government-guided funds directly invested + 70% three-year bank credit matching) has leveraged social financial capital into agriculture, which is conducive to the formation and cultivation of agricultural and rural financial markets.