Research On Financing Problem Of Family Farms In Hubei Province

The concept, standard as well as specific operational methods of family farms were proposed on Document NO.1 of the Central Government in 2013. A new type of agriculture business entities like family farm were born for the introduction of these documents initiatives, and has become a new and important mode of agricultural operation organizations in our country. Compared to the traditional agriculture, the family farm has higher intensive degree in the capital and technology, and it shows more of an advantage as higher rate in commodity, productivity and expedient positioning adjustment. It is not only an effective way and plays a decisive role in various occasions for solving the contradiction between the small scale peasant economy and big market, increasing the income of peasants, and also the way of solving the problem that concerns "Who will be farming" and "How to farm" in future, as well as enhancing the status of agricultural market economy, but also a staring expression of agricultural large-scale operation and modernization. The family farm is said to be an important carrier of development in modern agriculture and the inevitable trend of agricultural management mode in our country in the future simultaneously.According to the Ministry of agriculture survey results showed for the first time, there were a total of 877,000 family farms which operating area of 1.76 million hectares and 200 acres of average size in China. The development of family farms in Hubei province is relatively rapid. As the end of 2012, the total number of family farms reached 43400, the agricultural workers grew to 19.84 million, with the 250.24 acres of arable land and 178.00 acres of arable land per household which was 38 times of the provincial farmers’average. The crop farming, aquaculture and integrate were up to 14068,25204 and 4098. Family farms with more than 500 acres of business scale had a number of 705. Thriving scene presented in development of family farms profiting from farmers’enthusiasm for production that had been fully mobilized. However, a variety of problems accompanied in the evolving process, phenomenon of a lack of funds is more prominent among them. The family farms are facing financial difficulties which seriously restrict the development and grow of family farms.So far, the government in Hubei province and the financial institutions related to agriculture have made great efforts on family farms. As we know, it is still not enough to solve the financing problem completely. The cause of the problem is complex while it is difficult to complete the task about solving the financing problem. In order to study the current situation of Hubei province about the difficulty of financing and then putting forward related suggestions, this paper focus on the basic train of thought for what problems occurred, why is there such a problem and how to solve the problem of the idea. For knowing these, we use many methods to analysis the problems, such as combining theory with practice, empirical analysis and research method, qualitative and quantitative standard and so on.In this paper, the proposition of Schultz--in the transaction cost theory, right theory, and poor credit rationing theory as the theoretical foundation of the dissertation, summarizing the related literature at home and abroad. To get the needed study data, we take 68 family farms in Hubei Province as the object for survey by questionnaires and interviews. Then we use the method of combining the qualitative and quantitative analysis to analyze the problems occurred in this paper.The descriptive statistics of the results found that there are so many problems in operating of family farms such as lack of funds, farms gap. Meanwhile, the financing channel is relatively single, also the blocking phenomenon is obvious, the financing will shows generally high. The low satisfaction degree of getting the actual financing, the small amount, the insufficient diversification, the blocked financing road and high risk of private financing are all the representation of family farms’ financing problem.Based on the questionnaire data that are finished, we use the logit model to study factors affecting the family farms’ financing behavior by the use of multiple logistic regression analysis (multinomial logistic regression) method and logistic multivariate probability distribution theory. Results shows that the family farmer’s age, culture degree, scale of family farms, the registered capital, the annual income of the family farm, whether to establish a financial management system and knowledge of national policies circumstances produce a more significant impact on the financing behavior of family farms. While using qualitative analysis of the causes of the financial problem caused summarized and founding the family farm’s own lack of financial management system, financial institutions chase-profit, social service agency is missing and the government plays no equalization are the main causes of financing difficulties.It founds that cooperative financial and monetary policy in the rural financial system is an integral part of the government who is playing a fundamental role in promoting in financing to support family farms through success comparative analysis on the United States, Japan and other countries about how to solve the financing problems of family farms. Private finance on the family farm financing has played a certain role, which has very important inspiration and reference for Hubei province to solve the financing problems of family farms.Finally, combining the result of the survey of family farm in Hubei province and the reason, this paper puts forward some study advice which based on family farms itself, banks, non-bank financial organization, government and society. They are:(1) the promotion of "grass-roots financial" (namely, village banks, loan companies and funds) new financial institutions, improvement the efficiency of the family farm financing. (2) taking of the limit of the private financial regulation and making it legal, strengthening oversight and developing the positive role of the private finance in the family farm. (3) Encouraging banks to bold innovation, eliminating barriers to lack the mortgaged property, for supporting a broader loan for family farm path. (4) Strengthening government’s support, enjoying preferential policies to give family farm fewer region tilt, replacing subsidies with awards which were used. At the same time, improving the family farm production enthusiasm. The key is to make the government and society play an important role in the construction of the family farm financing system which is the purpose of better development and providing relevant reference for solving the financing problem of family farms in Hubei province and even the whole country.