Agricultural machinery subsidies as collateral, solving farmers' difficulties in buying machinery
During the wheat harvest season, it is the peak sales period for wheat harvesters. Recently, in the sales hall of Hengtong Agricultural Machinery Co., Ltd. in Guangrao County, Shandong Province, business manager Cai Chuanren enthusiastically introduced the prices and performance of various harvesters to farmers who came to buy machinery. "With the 'agricultural machinery loan', sales this year will increase considerably." He said with a smile to the reporter.
At this time last year, Cai Chuanren was frowning with worry. In 2014, in order to simplify procedures and eliminate fraudulent subsidy claims, the state adjusted the agricultural machinery purchase subsidy policy, changing from "differential purchase of machinery" to "full-price purchase of machinery". Farmers needed to pay the full purchase price first and then apply for the subsidy, so the financial pressure of buying agricultural machinery suddenly increased. Some simply did not buy, or else demanded that the purchase subsidy be advanced. "We dealers are not only facing the pressure of declining sales, but also bearing the pressure of tight working capital." He said that the "agricultural machinery loan" launched by Qishang Bank really solved the problem.
"A full-price purchase of machinery is nothing more than the subsidy being paid a few months later. We can first give farmers a loan of the same amount, and they repay it after the subsidy comes through." Zou Qian, general manager of the Small Enterprise Financial Service Center of Qishang Bank, said when talking about the design idea of the "Qidongli - 'Qicheng' credit agricultural machinery loan" product that farmers only need to pay 70% of the purchase price to the dealer, and the remaining 30%, which is the amount of the agricultural machinery purchase subsidy, is directly provided by Qishang Bank to the dealer in the form of a farmer loan, easing the financial pressure on both farmers and dealers.
The purchase of agricultural machinery is highly seasonal, concentrated before spring plowing, summer harvest and autumn harvest, and farmers use "urgent money". So how can the "agricultural machinery loan" be issued to farmers within just one week? "The collateral for the 'agricultural machinery loan' is actually the agricultural machinery purchase subsidy. With national policy as credit collateral, the lending risk is basically zero." Zou Qian explained to the reporter that agricultural machinery dealers recommend to Qishang Bank purchasing farmers who hold the "Agricultural Machinery Purchase Subsidy Application Form" and bear joint liability. Farmers only need to provide basic documents such as ID card, marriage certificate, household register, purchase contract and deposit receipt and pass the credit review. After opening a special account at Qishang Bank and transferring 70% of the purchase price to the dealer, the bank can issue the loan.
"This loan is very simple to handle. No collateral, no guarantee, and the bank also provides door-to-door service, so I do not have to run back and forth." said Li Bin, a specialized agricultural machinery farmer in Guangrao Town of the county. A week ago, he obtained a loan of 32,000 yuan through the "agricultural machinery loan" and smoothly purchased one wheat harvester worth 110,000 yuan.
"Our credit extension to farmers is for one year, consistent with the longest interval from farmers' purchase of machinery to the issuance of the subsidy, ensuring that farmers repay after receiving the subsidy and avoiding overdue payments. Farmers can also repay early at any time, and we calculate interest by the day." said Li Jiahan, a clerk at Qishang Bank. In fact, because this loan product can help increase sales, through our mediation, most dealers are willing to bear this part of the interest.
Zou Qian admitted frankly that although the "agricultural machinery loan" has a small amount per transaction and the bank's return is not high, Shandong Province has a very large agricultural machinery market, and once the total volume rises, the return will not be bad. Most importantly, this loan product can generally meet the credit needs of new agricultural business entities such as large growers, cooperatives and family farms. It can be said to be an attempt at supply-side reform in rural microfinance. Up to now, the "Qidongli - 'Qicheng' credit agricultural machinery loan" has cumulatively provided 4089 farmers with 325.2 million yuan in credit funding support and was rated as one of the nation's "Top 20 Financial Products Serving Agriculture, Rural Areas and Farmers".
"Although we try to contact agricultural machinery dealers so that they recommend farmers, conduct batch inspection and batch lending, and branches in various places can also handle it, there are few staff, so it often requires the Zibo head office to send clerks to assist, rushing to other cities to contact dealers door to door. Overall promotion efficiency is still not high." Zou Qian said that if support could be obtained from local agricultural machinery bureaus to make recommendations to local agricultural machinery dealers, this product could benefit more farmers.
Short commentary
Innovating financial products from the supply side, Qishang Bank's practice targets the "bullseye" of multiple parties' needs: for government departments, the product allows beneficial-to-farmers policies to be implemented for every machinery-purchasing farmer, letting them directly enjoy the benefits brought by subsidies; for farmers, they no longer have to pay the full amount when paying for agricultural machinery, reducing the pressure of purchasing machinery and increasing their ability to start businesses and generate income; for agricultural machinery dealers, it saves the cost of advancing up to tens of millions in funds in a year.
The "agricultural machinery loan" may appear to be a minor innovation aimed at the adjustment of the national agricultural machinery purchase subsidy policy, but it truly solves the "last mile" problem in the implementation of beneficial-to-farmers policies. At the same time, this innovation also opens up a "blue ocean" for microfinance services to benefit and support agriculture, and is worth learning from and promoting.
Reporter Li Chun