What Is Agricultural Credit?

In agricultural economic activities, lenders supply money (or commodities) to borrowers, who regularly return and pay interest. Capitalist agricultural credit is a form of borrowing capital to invest in agriculture. However, due to the high risk of agricultural production, high requirements on loan interest rates and mortgage conditions, large farms are more likely to obtain loans from commercial banks, and small farmers often rely on cooperative credit to obtain funding sources. Under socialist conditions, agricultural credit is a general term for credit activities by financial organizations to absorb deposits and issue loans in rural areas. It is a form of mobilization and distribution of temporarily idle monetary funds in the rural areas to provide capital turnover during agricultural reproduction.

Agricultural credit

Right!

In agricultural economic activities, lenders supply money (or commodities) to borrowers, who regularly return and pay interest. Capitalist agricultural credit is

The reasons are as follows: Socialist agricultural production is commercial production. During the capital movement accompanying the commodity movement, a certain amount of monetary funds will inevitably be temporarily stored in the hands of agricultural production, management units, and farmers. Only through the form of credit can this part of the capital be absorbed and concentrated, and it can be used for agricultural production in a planned way without changing the ownership of the funds. The agricultural production cycle is long, the capital turnover is slow, and it is greatly affected by natural disasters. Farmers will inevitably encounter difficulties in lack of funds in production and life, and they need to rely on agricultural credit to solve it. In order to realize agriculture

Feudal agricultural credit

As early as the Spring and Autumn Period and the Warring States Period, China's agricultural credit had private free loans and usury by officials and businessmen. In addition, there were also government loans issued by the government to the people and grain loans between countries. After Qin and Han dynasties, the scale and variety of agricultural credit expanded. After the Northern and Southern Dynasties, there were pawns and righteous warehouses. In the Song Dynasty, Wang Anshi reformed the law, promoted the system of young crops, and provided loans to farmers. After the Ming Dynasty, agriculture

Agricultural credit is an important part of the entire credit.

Agricultural credit

(I) Irrational agricultural loan structure

1. The proportion of agricultural credit investment in the total amount of all types of bank loans in the country was too low. From 1980 to 1989, it averaged only 6.5% per year.

2. The growth of agricultural production loans was slower than the total growth of various loans of the Agricultural Bank of China and credit cooperatives, with an average annual average of 23.2% from 1980 to 1989; industrial and commercial loans increased by 4 times during the same period, and agricultural loans increased by only 1.9 times.

3. Of the total agricultural loans, the grain planting industry accounted for a large proportion, with an average of about 70% each year from 1983 to 1987, while loans for diversified operations of forestry, animal husbandry and parafish were only about 30%.

4. In the loan for planting industry, the short-term loan for the production costs of conventional seeds, fertilizers, pesticides, films, etc. in that year was too large, accounting for about 80%. However, there are fewer medium and long-term loans for agricultural infrastructure, farmland infrastructure construction, water conservancy construction, agricultural machinery, agricultural resource development, agricultural technology development, etc. to enhance the development of agricultural production.

(Two) two-way restrictions on agricultural credit supply and demand

1. Credit demand constraints

(1) The short-term agricultural production behavior has led to a relatively contraction in agricultural investment. Due to the small and scattered land management scale after the farmers contract, they lack a sense of stability in the land-use machinery, prioritize the immediate benefits over the long-term investment, form a short-term behavior of land management, and implement predatory management. Farmers pay more attention to those industries with less investment and high efficiency, and they are reluctant to invest in medium and long-term benefits such as farmland capital construction, water conservancy construction, agricultural machinery, and resource development. In addition, the agricultural workers' ideology and personnel quality have an important impact on agricultural credit investment. The level of cultural education and technology of agricultural workers in China is generally low, which hinders the combination and use of modern agricultural production factors and science and technology. They have long been imprisoned in thinking, and farmers in many areas are still keeping the self-sufficient small-scale peasant family economy, taking debt-free as a sign of a well-off family. The expansion of reproduction is limited to their own strength, and they are unwilling to provide external assistance on the condition of repayment, which weakens their expectations of credit funds.

(2) The purchase price of agricultural products is relatively low, and the prices of agricultural means of production have soared year after year, making the benefits of agriculture, especially grain production, relatively low. Distorted agricultural product prices and rising production costs have dampened farmers' input. Under such circumstances, farmers are bound to feel that farming is not cost-effective, and they are even more reluctant to borrow to increase input to farmers.

(3) Due to the relatively high risks of agricultural production, the guidance of industrial policies and differences in economic benefits, a large amount of social capital flows to industry and commerce, to cities, and to industries with high profits. According to the survey, the per capita income of rural non-food specialty households is 21-37% higher than that of grain specialty households. In 1989, the net income of farmers investing in the primary industry was 1.83 yuan per year; the net income of the secondary industry was 2.71 yuan; the net income of the tertiary industry was 14.58 yuan. In this case, it will inevitably lead to the shift of the productivity factors of the farming households.

2. Restrictions on credit supply

(1) Rural credit funds are tight. In recent years, agricultural funds have been eroded in many ways and at various levels, which has led to tight rural credit funds.

Corporate deposits declined. The issuance of various financial securities, local fiscal arrears to supplement corporate losses, mark-ups and subsidies for subsidies, local governments' excessive withdrawal of corporate profits and apportionment to enterprises, the development of rural cooperative foundations, and the increase in social fund raising have led to a substantial decline in corporate deposits .

Deposits turned in increased. All kinds of deposits and subscription bonds issued by grassroots banks to the People's Bank of China and professional banks increased. Grassroots banks generally paid about 30% of total deposits, some as high as 50%. The People's Bank of China also stipulated that the declining part of the funds for purchasing agricultural and sideline products should be turned in by 50%.

Many financial institutions set up branches in rural areas to compete blindly and dig out rural funds.

The increase of funds for purchasing agricultural and sideline products has increased the tightness of funds for agricultural loans. For many years, the funds for the acquisition of agricultural and sideline products have been completely contracted out by the Agricultural Bank. In recent years, as the output of agricultural and sideline products has continued to increase and prices have risen, the demand for funds for the acquisition of agricultural and sideline products has increased. The balance of loans for purchasing agricultural and sideline products in 1985 was 59.5 billion yuan, 60 billion yuan in 1986, 69 billion yuan in 1987, and 79 billion yuan in 1988, accounting for 30% of total loans, and some provinces accounted for as much as 40% 50%. Even so, it still could not meet the demand for acquisitions. In 1988, the acquisition department hit farmers with billions of dollars of "white bars."

The reduction of financial input has increased the pressure on the supply of agricultural loans. In recent years, the proportion of national fiscal investment in agricultural infrastructure to national infrastructure investment and the proportion of agricultural support funds to national fiscal expenditure have been increasing. In 1988, investment in agricultural infrastructure decreased by 67.7%, and funds for supporting agriculture decreased by 14.7% compared to 1980. In addition, since corporate liquidity was managed by the bank in 1983, corporate liquidity was changed from the supply of two financial banks to the supply of one. The proportion of the company's own liquid funds in the total liquid funds has decreased from 39..5% in 1983 to 18% in 1988. All fiscal reductions to agricultural funds need to be supplemented by agricultural bank credit.

The current agricultural credit plan is separated from funds. Although the credit plan is issued every year, the funds of the grass-roots banks are tight and they are induced by the rule of selecting the best investment. As a result, agricultural loans, deposit payments, acquisition of agricultural and sideline products, and high-profit production projects are bound to result.

(2) The one-size-fits-all tendency in financial policy restricts investment in agricultural credit. Agriculture is a protected basic industry. The state should also implement certain preferential policies for the financial sector serving agriculture. At present, taxes, interest rates, profits, credit funds, loan reserves, and other financial regulations, systems, and methods are often part of the agricultural industry and commerce industry. They all implement a policy that affects the amount of agricultural credit and credit cooperatives investing in agricultural credit.

(3) Due to the characteristics of agricultural credit, the operating efficiency of loans is poor. The cost of agricultural loans is large, and the profit rate is low. In particular, some deposit and loan interest rates are upside down after the loan interest rate has been reduced. A considerable part of the grass-roots agricultural banks and credit cooperatives have suffered losses and have difficulty maintaining their operations.

(4) Short-term behavior in capital operation. After the introduction of the contracting mechanism into banks, profit is the main business goal. When the Agricultural Bank of China and the credit cooperatives choose to invest in loans, they tend to focus on short-term loans and light on medium- and long-term loans; Low industry loans. Caused the unreasonable condition of rural credit structure.

(5) The inadequate agricultural loan interest rate policy has hindered the normal functioning of the interest rate leverage function and reduced the role of agricultural credit in flexibly adjusting rural production, circulation, and social capital surplus. From the 1950s to the 1960s, the country's agricultural loan interest rates were all lower than the industrial and commercial loan interest rates. Since the establishment of the professional bank, under the guidance of the idea that the Agricultural Bank cannot lose money, it has forced the Agricultural Bank to implement the same interest rate policy as the national industrial and commercial loans, which weakened its support for agriculture. In recent years, Agricultural Bank of China has adopted concessionary measures for certain policy loans. In 1986 alone, there were more than 20 low-interest loans below the benchmark interest rate of various loans of Agricultural Bank of China, with the loan amount reaching 101.4 million yuan. Banks receive less than 1 billion yuan in interest annually.

(6) Insufficient staff and low quality of rural financial institutions affect the operation of agricultural credit funds. With the development of the rural commodity economy, the use of modern agricultural technology and the increase in agricultural loans, the requirements for agricultural credit work have become higher and higher. However, there is a serious shortage of credit staff in rural grassroots banks in China, and their business level is relatively low. In contrast, there are more managers above. From 1986 to 1989, the administrative staff of the Agricultural Bank of China increased by 15.640, and the proportion of agricultural credit personnel in the total number of employees decreased from 11.2% in 1986 to 9.2% in 1989. During this period, the number of agricultural credit personnel did not increase, but fell by 17.8%. Some grass-roots business offices do not have full-time agricultural loan officers, which severely affects the issuance of agricultural loans, reduces the effectiveness of investment operations, causes slow capital turnover, and has a large number of overdue and stale loans, which affects the implementation of the policy of preferential credit to agriculture Affect the role of agricultural credit.