Guangzhou Rural Commercial Bank Scale Pig Breeding Enterprise Credit Risk Research

In recent years,China has put forward the specific macro strategy to strengthen its agriculture,with increasing innovation efforts to modernize agriculture.Besides the optimization of technology,management,labor,land and other eleme nts,it encourages financial capitals to extend credit to modern agriculture.As China's pig breeding and pork production account for half of the world's total,with 61% of the meat consumed by urban and rural residents being pork,there is a huge demand in pig breeding industry.Thanks to the industry scale and its stable returns,large-scale pig breeding enterprises(LPBEs)are listed as target customers by banks and other financial institutions.There are a series of challenges faced by banks and other financial institutions including pre-loan investigations,risk assessment,and post-loan monitoring,which are caused by the great influence of prices of pig feed such as corns on the b reeding cost of LPBEs,the fluctuation in hogs price subject to "hog cycle",and the lack of unified assessment standards and rules on pig breeding by the husbandry association and the pig breeding industry.This paper focuses on the these issues with a case study of Guangzhou Rural Commercial Bank(GRC B),and seeks to work out a suggestion on strengthening the credit risk management of LPBEs,and develop a long-term mechanism in credit risk assessment of LPBEs for GRCB.The paper is based on the studies of American agricultural credit system,large-scale pig breeding process,and China's farmland mortgage by experts and scholars at home and abroad.It identifies the credit risks along the chain of pig breeding enterprises from different perspectives,with reference to the commercial loan theory,the asset conversion theory,the anticipated income theory,and the risk asset management theory.The paper has made a summary and an analysis of credit extensions to some state-level and provincial level leading pig breeding enterprises based on GRCB's existing credit management system(non-retail internal management system)coupled with personal experience in routine credit investigation,risk assessment,and post-loan monitoring work.A research method that combines chart analysis,practice analysis,theoretical-empirical analysis is employed to make a relatively thorough and systematic analysis of risk management of LPBEs from the angles of pig farming characteristics,profit analysis,industry risk and so on.Based on the different capital requirements at different stages of pig breeding,with reference to the economics theory and the risk asset management theory,relevant national laws and regulations,and subsidy policies,the paper develops a supplementary agricultural module to the non-retail internal management evaluation system,puts forward measures to standardize the duties of the supervising companies and improve the credit access mechanism for enterprises,and proposes to optimize the scoring criteria in project evaluation.