The Research On Private Equity Financing Method Of Agricultural Enterprises

At present, China’s agriculture is in the transition from extensive development to intensive development. Due to the long-term implementation of extensive agricultural production, coupled with the dependence on natural conditions for agricultural production, agricultural production has long cycle, long payback period and higher natural risk compared with other industries, leading to the capital flowing to the preponderant industry other than agriculture. Investors lack of awareness in emerging agricultural development in China, resulting in the phenomenon of consciously avoiding agricultural sector, increasing the difficulty of financing for agricultural enterprises. With the transition of agriculture from traditional mode of operation to modern agriculture, the funding needs of agriculture and the profit model are both in change. Private equity investment, as a new type of financing, can be one of the effective ways to solve the difficult financing problem of agricultural enterprises. Private equity will bring enterprise funds, in the same time, bring in modern methods of production, and enhance corporate value by value-added services. Therefore, promoting the private equity investment into the agricultural sector is of great significance. The research on private equity investment in agriculture is not much, but the combination of the two is a good choice. So the article deeply studies the combination of the two both in theory and practice, and put forward policy recommendations to support this approach, in hope of providing a reference for theory community and practice community.Based on the background above, the article studies on the ways in which private equity impact on agricultural enterprises, and analyzes what impact will make by theoretical analysis and empirical analysis; Through statistical analysis of status, the article finds out the reasons why agricultural enterprises have less attraction to the private equity, and further proposes the establishment of mechanisms for the effective promotion of private equity investment in agricultural enterprises to solve the funding problems of business in the process of upgrading and restructuring. By analyzing, the article draws conclusions following below:agricultural production is in change, the industry chain is gradually taking shape and in integration, and China’s agriculture is facing unprecedented opportunities for development. Most of China’s small and medium agricultural enterprises, in their development process, face difficulties in financing, and private equite investment is one of the effective ways to solve the difficult financing problem of agricultural enterprises. Private equity investment, through the value-added services, makes a positive impact on agricultural enterprises, enhancing corporate value and improving business performance. But the agricultural enterprises has less attraction to private equity investment, mainly due to higher risk of agricultural industries, a longer investment cycles, and the lack of a reasonable management structure for most agricultural enterprises. In the meantime, the agriculture-oriented capital of the society is not clear, leading to social capital inflows in agriculture is relatively small, macroscopically setting an obstacle for the private equity investment into the agricultural sector. To solve the problem, government guidance mechanism can be established, effectively guiding social capital into the agricultural sector. The government needs to put in place appropriate policies, establish a risk compensation mechanism, regulate policies to guide to prevent speculative capital and put forward special provision for the introduction of private equity into the agricultural sector.