Financial Support For Farmers’ Specialized Cooperatives

Farmers’ specialized cooperative is a transformation and innovation of Chinese agricultural production and operation system. It is a necessary carrier of the construction of new agricultural operation system and the development of modern agriculture. However, the lack of financial support inhibits the development of farmers’ specialized cooperative. Based on the related economical theory, this paper examined the selection behavior of both sides of debit and credit, explored the necessity of innovation in financial system and financial products, and empirically analyzed the lending activities of farmers’ specialized cooperatives, summarized three patterns of financial support of farmers’ specialized cooperatives. Drawing on the advanced foreign experiences, presented the theoretical frame of financial support of farmers’ specialized. The major contents and conclusions are as follows:(1) Based on the analyses of developing and financial situation of farmers’ specialized cooperatives in Hebei and other provinces, this paper drew the conclusion that lack of self- owned capital, financial support, and government support are the main factors that restricted the development of farmers’ specialized cooperatives.(2) Based on the economics and game theory, this paper constructed the game model of debit and credit, analyzed both the inside and outside reasons of the difficulty for farmers’ specialized cooperatives to get loan. The concluded reasons were, the weakness of the cooperatives, the information asymmetry, the lack of pawn and the high risk of agricultural operation.(3) The construction of empirical model utilized the statistics and survey data of farmers’ specialized cooperatives in Hebei province. Based upon the logit and Tobit model, this paper analyzed the factors that might affect the success for cooperatives to get financial support. The result showed that the factors which significantly affected the probability and the scale of the financial support the cooperatives got could be: the levels of profit and demonstration, credit rating, and the relationship between the bank and the cooperatives.(4) Using case analysis, this paper examined the pattern of the financial support development for farmers’ specialized cooperatives. Drawing on the experiences of foreign countries in farmers’ specialized cooperatives development and financial support, such as America, Germany, Japan, India, and Australia, this paper suggested that China should strengthen our advantages and avoid our weakness, explore the road of development considering our own characteristic and environment.(5) Based upon the theoretical and empirical analysis, this paper proposed the frame of financial support of farmers’ specialized cooperatives, that is improving the financial support condition in the way of innovating financial mechanism and products, and establishing fine financial ecological environment. The methods to tackle these problems could be, introducing compensate-punishment system, exploration of rural pawn for credit, development of scoring technology based upon solid techniques and development of relationship-based credit techniques based on "soft information".