Analysis And Countermeasures Of Agricultural Products Processing Enterprises Financing Difficulties

China has made remarkable achievements in agricultural and rural economy since the reform and opening-up of the country more than three decades ago, which has greatly encouraged and fueled the prosperous development of the agricultural product processing enterprises there. In particular, since the11th Five-Year Plan Period (2006-2010), this industry has been posting double-digit growth and undergoing dramatic changes in growth pattern while achieving rapid growths in output, contributing a lot to the integrated development of urban and rural areas and to the increase of peasants’income. However, the agricultural products processing enterprises also brace for a number of restrictions and difficulties in operation amid the rapid development, which are manifested in many aspects, such as problems coming from the internal part of the company like self-management, as well as factors from external world. Among them, capital shortage has been one of the most important reasons blocking the development of the industry. Compared with other industries,the agricultural products processing enterprises needs more capital, and the demands are usually very urgent and greatly diversify from different seasons. Especially, with the rapid development of China’s economy, consumers’demands for agricultural products are getting increasingly diversified and individualized. They attach more importance to the quality, safety, nutrition and health of products, which has accelerated the industrial updating and technological innovation of agricultural processing companies and urged them to make continuous efforts to achieve large-scale, standardized production and market-oriented operation. Therefore, agricultural product processing companies are more eager for capital.A great number of companies in the agricultural product processing enterprises are seeking capitals from other channels when the capital they have financed from formal financial institutions fall short of the demands of their production and operation, in order to ensure production and development. This has intangibly increased the costs and risks for themselves. Such helpless financing mode not only affects the development of the companies themselves, but also is harmful for the interests of both upstream and downstream companies. What’s more, the financing contracts are usually beyond the coverage of laws, and they may disorder financial markets and affect the stability of the society.The financing difficulties for agricultural product processing companies can be reflected from the following aspects, namely, their difficulties in the satisfaction of the high mortgage threshold set up by formal financial institutions, the high financing costs for development, the long business circle, the slow paces in the withdrawal of funds from circulation, and the high pressure for punctual repayment, the small number of financing channels, the small quantity of loans gained, the difficulties in the satisfaction of demands, etc. A slew of factors have led to these difficulties. For instance, companies in the agricultural product processing industry are weak, lack of self-accumulation, and limited in financing capacities; some financial institutions like banks prefer affluent companies to poor ones, place great emphasis on large-scale companies and have little tolerance to risks. Other factors, such as the unbalanced development of middle-and small-sized financial institutions in different regions, as well as insufficient support of the financial and taxation policies of China, also lead to the difficulties.In recent years, SMEs are playing more and more important roles in the development of China’s economy. The government of China has further stepped up its efforts to prop up the industrialization of agriculture, successively enacting a series of policies to promote and support the financing of SMEs, as well as the financial development of rural regions. Commercial banks are actively developing and continuously exploring market room, as well as making ceaseless innovations to their products to meet the credit demands of SMEs, launching a great number of new financial products and services in time. In addition, foreign countries’SME-supporting financial measures and agriculture-related financial policies offer a lot of reference to China and they will play an important role in the resolution of the financing difficulties of China’s agricultural product processing industry.Analyses have to be made from financial institutions, companies, governmental management departments, markets, intermediary service providers and other aspects, so as to promote the development of China’s agricultural product processing industry, resolve their difficulties in financing, and constantly improve the financial services for enterprises. Financial institutions including banks have to make innovations on the financial services for agricultural product processing industry through their business mechanisms and institutional systems. Agricultural product processing companies have to further improve their operation system and property system, streamline structure and raise financing ability. While governments should further improve their financial supporting system, as well as boost financing services for companies in policies, commercial and credit financing guarantee systems, policy auxiliary systems and mechanisms. In addition, all parties have to promote the establishment of a socialized service platform to improve supporting services for the financing of agricultural product processing companies.