The next policy after agricultural subsidies is favorable - rural finance

Agricultural machinery subsidy enters the second half of the year and farm machinery sales decline in the first half of the year

From January to April 2010, people spent a long period of low demand for domestic agricultural machinery. The market did not reproduce the prosperity of the same period in 2009, and there was a big gap between the expectations of people at the beginning of the year and the desolate market was beyond the expectation of many people.

According to information collected from the terminal market, as of the end of April, the number of actual sales of large and medium-sized wheeled vehicles in the industry was 50,000, a year-on-year drop of more than 55%; the ratio of social inventory to real sales was approximately 3:1. There are only about 8,000 wheat combine harvesters, known as the weather vane market. In addition, sales of fully-fed rice harvesters were only around 2,000 units. At the same time last year, the number of wheat combine harvesters reached 35,000, and 13500 rice combine harvesters were fed. Real sales of the two products decreased by 75% and 80% respectively year-on-year. The large decline in sales of socially sold master-sale products is shocking. At the same time, the huge channel inventory in the market has caused great financial pressure on manufacturing and distribution companies, and it has also caused some people’s psychological panic. Faced with the actual sales situation in the market that is changing rapidly, we need to think hard, look for the root of the problem, and thoroughly explore the causes and solutions.

The market demand for agricultural machinery and equipment is still huge

With the continuous advancement of “new rural construction”, great changes have taken place in rural land and farming methods. The land has become more concentrated through various circulation methods, resulting in the production of large-scale farms; and the production of large-scale land parcels. In turn, this has also spawned a transformation of farming methods. Manpower alone can no longer meet modern agricultural production, and the continuous increase in the mechanization rate of agricultural machinery is imperative. In addition, the industrialization of agricultural production is becoming more and more obvious, and industries with professional agronomic knowledge and operational skills are in place. The peasants are gradually replacing the traditional farmers who used to rely solely on manpower and heaven to eat. They have also formed enterprise-oriented agricultural production service organizations, such as farms and agricultural machinery cooperatives. In this process, the demand for agricultural machinery must rise steadily, especially for large-scale agricultural machinery. As of 2009, the national average tillage rate was 60%, the machine sowing rate was 36%, the aircraft yield was 30%, and the comprehensive mechanization level was only about 50%, far below the level of developed countries. This shows that China's FromEMKT.com.cn demand for various types of agricultural machinery will still be extremely large in the future for a long period of time.

After the subsidy subsides, there is a large gap in the agricultural machinery market.

In view of the importance attached to the agricultural machinery industry and to the acceleration of the process of agricultural mechanization, the state began to implement a large-scale agricultural machinery subsidy policy in 2003. However, after a few years of experimentation, the favorable role of the agricultural machinery subsidy policy for the agricultural machinery industry has been gradually diminishing. The deserted market this year also illustrates some problems. The subsidy of agricultural machinery did not fundamentally solve the problem of farmers purchasing funds. To a certain extent, it only used a discount on the original price of agricultural machinery, but for some higher-priced machinery (such as high-power half-feed combine harvesters, large and medium-sized Tractors, etc.) are cups of water. For the agricultural planting enterprises and agricultural cooperatives that have a higher demand for agricultural machinery, subsidies for agricultural machinery have only solved part of the funding gap and have not changed their funding requirements in essence. Due to the development of agriculture in the direction of intensive, mechanized, and specialized industries, the main body of purchase has undergone major changes. The enterprise-oriented agricultural organizations are bound to pursue higher capital turnover rates and have learned to use credit leverage to expand production scale.

Financial leverage can solve the shortage of funds in the agricultural machinery market

In agricultural developed countries such as Europe, America, Japan, and South Korea, when state subsidies cannot solve the problem of capital shortage, other financial instruments will work in conjunction with the state subsidy policy. U.S. operating agricultural loan funds are mainly used to help farmers make necessary production adjustments and adopt improved farming practices. This fund can be used to purchase equipment, livestock, feed, seeds and fertilizers; to meet the needs of other farm and family activities; to repay movable property debt; to conduct forestry and aquaculture projects; and to develop income-generating entertainment businesses. The farm operating loan issued by the Agricultural Credit Administration must not exceed $100,000; however, the institution can also guarantee farmers loans borrowed from other sources within $200,000. The loan repayment period must not exceed 7 years, but it can sometimes be deferred. Interest rates are determined annually by the U.S. Department of the Treasury and the Department of Agriculture.

China's rural finance is booming

The central government’s series of actions on the rural financial system at the policy level can indicate that the central government’s subsidy policy for the agricultural machinery industry has undergone a certain transformation. From the blind subsidies in the past to the simultaneous subsidies and credits, even in the near future, the subsidy may be It will gradually disappear in our sight. It is also a good idea to replace the subsidy system with a sound rural financial system.

The Central Document No. 1 for two consecutive years has focused on rural financial-related issues. From 2009 on “enhancing rural financial services capabilities” to “upgrading rural financial services in 2009, we can clearly see the central government.” A clear attitude towards rural financial work.

In 2009, the China Banking Regulatory Commission compiled the Overall Work Arrangement for New Rural Financial Institutions for 2009-2011, and plans to establish 1,293 new rural financial institutions throughout the country within three years. At the same time, a “double-linked link between east-west and urban-rural linkages” has been formulated, and a clear linkage has been proposed between the Baiqiang County (or large and medium-sized cities) and the 1:1 and national poverty-stricken counties in the central and western regions. Social investors set up new rural financial institutions in the Midwest and rural areas.

In May 2010, the Ministry of Finance and the State Administration of Taxation jointly issued the "Notice on Tax Policies Related to Rural Finance". In the future, financial institutions will be exempted from business tax on interest income from small loans issued by farmers. This means that a large financial institution such as ABC, which specializes in serving the countryside, will also receive the same policy in terms of smallholder loan interest income, which will help encourage large financial institutions to better serve “three rural issues”. According to industry insiders, this is the most preferential taxation policy for rural financial development in recent years.

On the other hand, considering the prospect of China's rural finance, state-owned large-scale commercial banks and foreign-funded banks have entered the Chinese rural financial sector. The two international banks of Citigroup and Standard Chartered have started their rural microfinance businesses. The village and township banking system of China Construction Bank and Agricultural Bank of China has already made its appearance, together with the original rural credit cooperatives, postal savings banks, small loan companies, pawn shops, etc. China's rural financial market has shown a flourishing and healthy growth.

At present, rural finance is still the weakest link in China's entire financial system, and the competition and difficulties faced by existing rural banks (rural credit cooperatives, postal stores, etc.) are increasing. Many state-owned large and medium-sized commercial banks began to gradually shift their targets to small customers. CCB, ABC, or even directly established their own village banks to compete with grass-root financial institutions; many other financial institutions also participate in competition; with China’s financial supervision With the continuous improvement of the system, the competition of financial institutions below the county level has become increasingly fierce. Fierce competition will also bring about the innovation and development of rural finance. The entry of state-owned large-scale commercial banks and foreign banks will also promote the development of the entire rural financial system in a more standard direction.

In the key aspects of obtaining loans, many ways of collateralizing mortgages have also made some innovations in the past few years. For example, at the Ganzhou Agricultural Bank of Ganzhou Ganzhou Branch, the city launched a mortgage on agricultural machinery. Agricultural Machinery Mortgage Loan is a collateral guarantee method suitable for financing needs of farmers in the framework of collateral pledges allowed by the law on the basis of the investigation of the financial needs of agricultural customers in the city. Targeted innovations and designs were carried out, and new credit products for "agriculture, rural areas and farmers" were launched. The product is targeted at high-quality rural individual customers such as large agricultural households and agricultural cooperative members. The borrower must be a large-scale breeding household that meets the standards of the municipal agricultural department and has an annual sales income of more than 100,000 yuan. It is included in the list of government agricultural machinery products and enjoys financial services. Agricultural machinery that subsidizes and is managed by the agricultural machinery department, including combine harvesters, tractors, seeders, fruit classifiers, grain dryers, etc., can be used for loan collateral. The maximum mortgage rate is no more than 30% and the maximum period is no more than three years. Although the Agricultural Bank of Ganzhou has some restrictions on lending targets, we can see from this case that within the existing system and framework, the use of agricultural machinery for mortgage guarantees is achievable. If this measure can be implemented nationwide, it will undoubtedly play a significant role in promoting agricultural machinery sales.

The agricultural machinery under the protection of rural financial policies sells well for the future

Imagine that the purchase of farm implements by future purchasers will be as simple as the purchase of housing and automobiles by urban residents. Providing corresponding mortgage guarantees or directly using agricultural implements for mortgage guarantees can be used to make a loan from a bank to a certain percentage of purchase money. Achievement can open the farm machinery home. This will completely change the existing agricultural machinery sales model, accelerate the survival of the fittest of the agricultural machinery industry, and will also play a positive role in the healthy development of the entire agricultural machinery industry.

When the subsidies for agricultural machinery no longer play a decisive role, the opportunity for the country to invest heavily in rural financial construction will be utilized. Agricultural machinery manufacturing and distribution enterprises will work closely with various financial institutions to jointly expand the vast rural market, perhaps opening up a more comprehensive and productive route. .