The Research On Agriculture Micro-credit In Tongzhou, Jiangsu

Agriculture accounts for a good part of Chinese economy. With economic development, issues concerning agriculture, countryside and farmers and the ever-widening urban-rural income gap are significantly affecting the economic transition of our country. The key to solve the above issues is to increase the wealth of farmers in a broad scope. To achieve this, credit support is essentialAgriculture micro-credit, mainly from agricultural commercial banks and supplemented by special small loan companies, is promoting agricultural progress and construction of the Socialist New Countryside. However, given the profit-seeking nature of commercial loans, the diversity of agricultural products, and the complication of risk, major financial institutions show little interest in providing agriculture-related micro-cerdit. The micro-cerdit mostly flow to circulation and service business, whilethe actual production process benefits very little-. Farmers’income may increase in short term under such circumstances, but there is no help with productivity improvement.Policies and regulations are needed to give guidance for agriculture-related loans, so as to promote development of modern agriculture. The mode of "Company plus Farmer" adopted by Tongzhou Jingrui Agriculture Ltd. greatly improves agricultural productivity and farmers’income, and can also deal with some market risk. Agriculture production under this mode becomes the main object supported by micro-cerdit. Effective rural social credit system will be necessary to win support from traditional commercial banks. The credit system must be funded by government, which also organizes commercial banks to construct the system together. Only when all credit information of farmers is shared by commercial banks, can credit risks be effectively controlled.However, the mode of "Company plus Farmer" does not consider the risk of natural disasters. When disasters come, production will suffer large losses, resulting in lots of bad debts. As a result, it is necessary to set up natural disaster insurance to protect farmers’interest. Moreover, products like modern agriculture risk management funds need to be developed. The fund is established with agriculture subsidy from government, and profit from farming company and farmers. The funds will be the ultimate compensation for agriculture.