Research Into The Issues On Agricultural Credit Support For Major Grain-producing Areas

The domestic and foreign practices proved that finance is the foundational support and requirement of modern agricultural economic development. There could be multiple points of view to cut-in from for researching the issues of agricultural finance. This article constructs an analytical framework from economic angle of view, takes the supplies and demands of agricultural credit as the main clue and major Jiangsu Province as the case, applies economics, finance related model method, estimates supplies, demands, and the gaps of agricultural credit from different levels, and conducts a quantitative analysis of its flow, thus, clears the current agricultural credit support's main quantified relationships and trends. The conclusions obtained are as follows:First, the gap between agricultural credit's supply and demand assumes an expanded trend. From 1993 to 2007, by selecting FIR, L/GDP and M2/GDP indicators, calculating their mean values, of the estimated theoretical mean value of national agricultural loan annual demand was 1,679.034 billion Yuan, and the average gap between supply and demand was 1,047.134 billion RMB, moreover, it assumed an expand trend year by year in the mass. Comparing at the same period, the Jiangsu agriculture's L/GDP index value had risen from about 0.1 to more than 0.45, in 2007, the absolute value of agricultural loan gap had reached 160.417 billion RMB, and similarly, assumed expanded trend.Second, the investment plays the leading role in the development of agricultural economy. During 1978 to 2007, the contribution rates of capital, labor force, land, and technological progress for the economic growth of agriculture in Jiangsu Province, are 64.51%, -2.11%, 1.04% and 36.56% respectively, explained that the capital plays the most important role in the development of agricultural economy in Jiangsu Province. According to the analysis of the structure of agricultural investment and rural finance in Jiangsu Province, the proportion of agricultural loan in agricultural investment had risen to 50% in 2007, indicated that the agricultural credit plays an important role in promoting the agricultural economy in Jiangsu Province.Third, the tendency of insufficient supply in rural finance is worrying, and private finance is an important supplement. In 2007, the total expenditure of grain production in Jiangsu Province was 39.62 billion RMB, in which the total cost was 38.859 billion RMB, and the expense outside cost was 0.761 billion RMB. However, the total investment of agricultural loans, financial support and peasants'own funds spending on grain production was 30.598 billion RMB, and the capital gap was 9.022 billion RMB. This indicated that the capital supply for grain production in Jiangsu Province is seriously insufficient, and the capital gap can only be made up by private finance.Fourth, the primary reason which causes the insufficient of agricultural credit supply is the outflow of rural capital. It is based on the calculation of agricultural deposits-loans surplus that the rural capital outflow from agricultural department to the secondary and tertiary industries reached 19.29 billion RMB in Jiangsu Province in 2007; and in the same year, basing on the calculation of peasants'deposits-loans surplus, the peasants'capital outflow was above 200 billion RMB, which was far more than the capital outflow through agricultural department. During 1998 to 2007, the deposits-loans surplus of four rural financial institutions in Jiangsu province increased year by year, it reached 267.49 billion RMB in 2007, and the deposits-loans rate was always above 2.0 every year. It is shows that the rural capital's massive outflow through the financial institutions leads to the insufficient of credit supply for grain production.Fifth, the key sectors supported and serviced by agricultural credit are still in the fields of agricultural production and services. In 2007, the costs of grain production, services, and circulation sectors in Jiangsu province were 30.049 billion RMB, 8.648 billion RMB and 0.162 billion RMB respectively, which accounted for 77.33%, 22.26% and 0.42% of its total cost respectively. It shows that the key sectors of agricultural capital demand in major grain-producing areas are grain peasants and various types of specialized peasants and cooperatives whom provide services for grain production.Through the above-mentioned theoretical analysis, it indicated that under the market-oriented condition, rural capital will flow and dispose to the non-agricultural industries in accordance with economic rules, even in a wealthy area such as Jiangsu Province, so, the financial needs of agricultural and rural economy are still urgent and serious. Therefore, I suggest that our country should take various measures to increase the financial support of grain and related industries; use incentive measures to induce the formal financial institutions investing in grain and modern agriculture, support and standardize the development of private finance; and use regulative method to control the excessive outflow of rural capital.