Is the spring of agricultural machinery rental coming?

Editor's Note: With the increase of rural labor force going out to work and the acceleration of land circulation, the number of new agricultural management entities in China is increasing day by day. The expansion of business scale has made them increasingly demanding for large-scale agricultural machinery, high-performance and composite machinery. However, limited ability to pay restricts their upgrading of agricultural machinery. As the first choice for foreign agricultural machinery purchase, can financing lease solve the financing problem of new agricultural operation subject? What are the market prospects for this model? What other constraints are there? Our reporter interviewed farmers on the spot and discussed with industry insiders.

Only enough money to buy a farm machinery,"buy" a farm machinery service team

April 17, Gongzhuling City, Jilin Province. Although this spring day is the same as usual, the wind blowing from time to time will roll the dust on the ground into the air, making people unable to open their eyes, but this day is definitely a good day for Xue Yaohui, chairman of Wanxin Farmers Professional Cooperative in Qianshan Village, Liufangzi Street.

Because on this day, Wanxin Farmers Professional Cooperative was formally included in the agricultural machinery financial leasing pilot carried out by Agricultural Bank of China Agricultural Bank Financial Leasing Co., Ltd. in Jilin Province. Xue Yaohui signed an agreement on behalf of the cooperative and the Agricultural Bank of China Lease. The members of the cooperative drove away nine high-powered tractors on the spot, adding "sharp tools" to the upcoming spring ploughing.

Old Xue is a native farmer in Piedmont Village. He has been planting corn on more than one (15 mu) land in his home. In 2007, he initiated the establishment of Wanxin Cooperative. In 8 years, the membership has grown from 7 households at the beginning to more than 1100 households at present, and the business scope has also expanded from planting to breeding, agricultural machinery operation and grain storage.

At present, the cooperative has transferred more than 7700 mu of land, but the land operation area has reached 51,000 mu, covering 7 surrounding towns and towns. In Xue Yaohui's view, agricultural machinery played an important role in the expansion of cooperative scale. "How many farmers can cooperatives cooperate with and how large they can be, the key depends on agricultural machinery." But what worries us most is agricultural machinery, because for cooperatives, purchasing agricultural machinery is the biggest investment, not only the amount of single funds is large, but also the replacement is fast."

Before that, Wanxin Cooperative owned 89 sets of agricultural machinery for ploughing, planting and harvesting, but most of them were small and medium-sized agricultural machinery. The maximum power of tractors was only 90 horsepower, and there was no high-horsepower machinery. Many harvesters had fallen behind and needed to be updated urgently. But where does the money come from?

In the past, almost all of these agricultural machinery, whether worth 200,000 or 300,000 yuan or 400,000 yuan, were purchased by cooperatives with their own accumulated funds. "It's all money saved in my teeth. It's not that we don't want to borrow money. We borrow money in the name of cooperatives. It's a corporate loan. We have to provide qualified collateral. We can't get much that meets the bank's requirements. The only way to get a loan is to pay interest on the loan, guarantee company fees, security deposit, and put 900,000 cash in the bank. The cost is too high." Xue Yaohui said.

However, if you choose the financing lease mode, a 200 horsepower tractor worth 1.4 million yuan, Wanxin Cooperative can drive away only after paying 20% down payment after being guaranteed by the dealer. The remaining principal and interest will be paid off in two years for tractors and three years for harvesters. After paying off, the cooperative will have complete ownership of these "big iron oxen". "The total price of these agricultural machinery exceeds 5 million yuan, and we dare not think about it by ourselves." But now spread the expenses over two or three years, like instalments, and it won't be a problem." Xue Yaohui's repayment confidence comes from the comprehensive income of about 3 million yuan per year of the cooperative.

An agricultural machinery becomes an agricultural machinery service team, and the operation efficiency is greatly improved. In Xue Yaohui's vision, in the next three years, the operation scale of the cooperative will be doubled several times. Financial leasing helps him solve the problem of agricultural machinery purchase, and he is more interested in future development.

The market has broad prospects, but it is still in its infancy

The financial difficulties encountered by Xue Yaohui and Wanxin Cooperative are not unique cases. In recent years, with the increase of rural labor force going out to work and the acceleration of land circulation, China's agricultural development has entered a new stage, which is transforming from traditional decentralized management of farmers to a new management system combining intensification, specialization, organization and socialization. With the expansion of business scale, the demand for large-scale agricultural machinery, high-performance and compound machinery by new agricultural operators is becoming more and more vigorous. At the same time, factors such as shortage of rural labor force and rising labor costs objectively require improvement of mechanization level. However, faced with the unit price of hundreds of thousands or even millions of large-scale agricultural machinery, the purchasing power of farmers or cooperatives is really limited.

Agricultural machinery purchase subsidy policy started in 2004 has played a certain role in supporting various agricultural operators to purchase and use agricultural machinery and promoting the development of agricultural mechanization. However, since the gradual implementation of the "full purchase" quota subsidy policy, the problem of shortage of funds for buyers has become increasingly prominent.

It is a way out to solve the problem of agricultural machinery purchase fund through loan, but the bank loan approval time is long, the procedures are many, and effective collateral needs to be provided. The repayment cycle is usually not matched with the agricultural production cycle, which makes it difficult for the main body to obtain loan, but also bears higher capital cost and repayment pressure.

As both financing and financing functions of agricultural machinery leasing, it makes it possible for all kinds of agricultural business entities to "spend small money to do big things". Chen Peihua, president of Agricultural Bank of China Leasing, introduced that because the agricultural machinery itself as the subject matter of lease is effective collateral, the lease business procedures are relatively simple, and the credit requirements for farmers, down payment proportion, financing line, collateral, application procedures, handling fees and other aspects of "threshold" are lower. The lease repayment method is also more flexible. According to the lease design of Agricultural Bank of China, the repayment cycle is relatively matched with the agricultural production cycle, and the principal is returned during the cash flow abundant period such as subsidy fund cashing and autumn harvest, which greatly reduces the repayment pressure of farmers and cooperatives.

In fact, agricultural machinery leasing business has a history of decades of development in European and American agricultural developed countries, and it is the first choice for farmers to purchase and use agricultural machinery equipment. Limited to lack of understanding of financial leasing and other reasons, this business started late in our country and progressed slowly. Data show that at present, the total number of leasing companies supervised by CBRC and Ministry of Commerce has exceeded 2000, and the asset scale is close to 3 trillion yuan, but there are only a few companies carrying out agricultural machinery leasing business, and the asset scale is also very small.

Some insiders estimate that the market capacity of agricultural machinery leasing in the next few years will reach the scale of 10 billion yuan. The scope of agricultural machinery leasing will also be connected to the agricultural industry chain, covering all links before, during and after production. "Financial leasing service 'agriculture, rural areas' is a blue sea market full of business opportunities." Chen Peihua said.

Policies boost development, but there are still constraints to be solved

Because of its flexibility and convenience, financial leasing business provides a new way to solve the financing problems of "agriculture, rural areas and farmers". However, the development of financial leasing business also needs the cooperation of many conditions.

Since last year, agricultural machinery leasing has been mentioned many times in relevant documents of the State Council executive meeting, CBRC and Ministry of Agriculture. The executive meeting of the State Council in April last year emphasized the importance of developing agricultural machinery financial leasing services. In July, CBRC and Ministry of Agriculture jointly issued guidance opinions, proposing to vigorously develop agricultural leasing business and actively innovate new agricultural leasing products. In August, the Ministry of Agriculture issued a notice encouraging the establishment of financial leasing companies that mainly serve agriculture, rural areas and farmers, and encouraging various financial leasing companies to carry out financial leasing services for large-scale agricultural machinery and equipment. This year's Central Document No. 1 also clearly proposes to "carry out large-scale agricultural machinery financing leasing pilot". Industry insiders analysis, policy boost agricultural machinery financial leasing business development, will be conducive to solve all kinds of agricultural business entities due to insufficient funds and can not buy the problem, to a greater extent stimulate the purchase potential, will also benefit the overall development of agricultural mechanization.

The reporter also learned in the interview that the development of agricultural machinery leasing business is still facing some constraints. At the policy level, at present, in the implementation of agricultural machinery purchase subsidy policy, financial leasing companies are not within the scope of subsidy objects, so they cannot enjoy subsidies when directly purchasing agricultural machinery to carry out leasing business. At the same time, the customs supervision policy of imported agricultural machinery also restricts the business of financial leasing companies. In addition, the factors restricting the development speed and quality of domestic agricultural machinery financing leasing business include the low scale of agricultural production in China, the imperfect rural credit system, the lack of understanding of financing leasing by agricultural machinery industry and new agricultural operation subjects, and the limited management level of financing leasing companies.

Chen Peihua suggested that in the future, relevant policies such as agricultural machinery subsidies should be further improved, and tax reduction policies should be used to encourage agricultural machinery financing leasing operators to carry out business innovation. On the other hand, we should strengthen the construction of rural leasing market and financial environment to create a good operating environment for the development of agricultural machinery financing leasing.

◆ Extended reading ◆

Financing lease refers to a leasing method in which the lessor buys the equipment selected by the lessee and leases it to the lessee for a certain period of time with dual functions of financing and financing.

Financial leasing business is generally aimed at items with long life and high value, so this business is very popular in the field of construction machinery. By separating the ownership of the goods from the right to use, it has the characteristics of combining financing and financing. When there is a problem, the leasing company can recover and deal with the leased goods, so the credit and guarantee requirements for the lessee are not high when financing. Moreover, under normal circumstances, financial leasing credit line is large, repayment period is relatively long, so it is very suitable for agricultural machinery field.