A Research On Evaluating And Controlling Of Credit Risk Of Contract Farming

In China contract farming plays an important role in promoting the industrialization of agriculture and increasing the income of farmers. However, the development of contract farming is not mature stage in China, and breach of contract farming occurs frequently. Therefore, lead the development of contract farming into a bottleneck. Since entering the "Twelfth Five-Year Plan", a series of events led social credit shortage problem has aroused wide concern. This thesis will begin with the credit view, research on factors of the factors of low success rate of contract farming, and try to find the effective way to control the risk. Contract farming is involved in many aspects, including agricultural enterprise, farmer, cooperation, agent, regulators, government and so on, so this thesis selects enterprise, which is the most likely to be dragged down by the credit, to be the object of the study.First of all, this thesis studied the literature on contract farming and credit risk of financial field. Then, found out the correlation between the two, and applied the latter to the field of contract farming. Through the analysis of factors in credit risk of contract farming to find out the largest one, then try to find ways to reduce its threat.However, found the main factors can not be shielded off the presence of credit risk in contract farming. Therefore, this thesis assumes that the enterprise will not breach, and attempts to use the financial field methods, quantitative credit risk in contract farming. After the analysis of various credit risk model, found that only the VaR can be applied to contract farming. Quantification of credit risk will allow enterprises to increase a reference for the future of agricultural cooperation. In practice, it can reduce the risk of the enterprise, which comes from farmers’breach.But only quantify the risk is also not enough, it also need to grasp and control of credit risk. Only in this way can make the enterprise more competitive. From the three perspectives of society, government, businesses, this thesis put forward the suggestions and ways to control the credit risk in contract farming.Finally, this thesis draws the following conclusions. Low cost of default is the main source of credit risk in contract farming. Credit risk models can be applied to contract farming services for enterprises. Establishing and perfecting social credit system and establishing enterprise credit management can indirectly increase the cost of the breach of farmers or cooperatives and effectively control the credit risk in contract farming.