2021-06-21

To make PPP model bring more grain production capacity

(18-MAY-2021)


The General Office of the Ministry of Agriculture and Rural Affairs issued the Guidance for Social Capital Investment in Agriculture and Rural Areas (hereinafter referred to as the "Guidance") to encourage social capital to cooperate with governments and financial institutions to take advantages of social capital marketization and specialization, and accelerate The innovative application of investment and financing models in order to open up more effective paths for social capital to invest in agriculture and rural areas and explore more typical models. Yuan Longping, father of hybrid rice, expressed his expectation that the PPP model will bring more grain production capacity.

 

To stable the expectation of social capital investment in agriculture and rural areas

 

At present, social capital has become the main force of China’s agricultural and rural investment, and its input accounts for about 80% of the fixed asset investment in the primary industry. In recent years, as the growth rate of investment in China has slowed down, the growth rate of investment in agriculture and rural areas has also dropped significantly, especially in 2019. Due to the impact of the coronavirus epidemic, the pressure to stabilize agricultural and rural investment has continued to increase this year.

 

Tang Chong, chief engineer of the Investment Institute of the Planning and Design Institute of the Ministry of Agriculture and Rural Affairs, believed that the "Guidance" will play a positive role in stabilizing the expectations of social capital investment , improving the investment environment, and strengthening policy guidance.

 

Tang Chong believed that the publication of this Guidance is not only of great significance but also issues timely. From the perspective of international experience, social capital investment in agriculture and rural areas requires appropriate methods and paths, and the purely commercial investment oriented by enterprises alone does not receive positive effects. Through innovative methods such as PPP, it can effectively integrate the resources and advantages, and better solve the current problems of small-scale agricultural and rural single projects, unstable investment returns, imperfect risk compensation mechanisms, weak project financing capabilities and difficulties in financing, which build a smooth path for social capital investment in agriculture and rural areas.

 

Building an effective project cooperation and operation mechanism for the government, enterprises, village collectives, and farmers by planning major projects suitable for social capital investment will not only effectively strengthen the protection of rural revitalization investment, but also help drive farmers to integrate into agriculture In the large pattern of rural modernization in the long run, which will improve self-development capacity of farmers and village collectives. Through project cooperation and operation mechanism innovation, it provided a powerful helping hand for promoting the modernization of grassroots rural governance system and governance capabilities.

 

The Guidance detailed the key investment areas that can help solve the problems of agriculture, rural areas and farmers. With regard to the previous focus on agricultural industrialization and modernization, the key investment areas also paid special attention to the cultivation of agricultural and rural talents and the improvement of the human settlement, which reflected the shift of policy focus to a "people-oriented" micro-scale.

 

Bai Yating, the representative of the United Nations Development Program in China, said that advocating investment in human capital in rural agriculture and the construction of digital villages can provide the rural population with more income-generating channels and better social services, and solve the poverty problem in a deeper and multi-dimensional manner, as well as other dimensions beyond income.

 

Facilitate the realization of the major social goals of agriculture and rural areas

 

Rural infrastructure construction is an important part of the rural revitalization strategy, and strengthening the construction of rural transportation infrastructure is the top priority. Huang Jianhui, dean of the China Minsheng Bank Research Institute, believed that the Guidance encourages the development of various forms of PPP public-private cooperation models, innovative financing mechanisms to attract capital into the village, and consolidate construction funding guarantees. Innovate financing mechanism to attract capital into the village to consolidate the guarantee of construction funds; promote the integration of rural transportation and the overall development of the village to open up the "last mile".

 

Professor Zhu Jing, dean of School of Economics and Management of Nanjing Agricultural University, said frankly that China’s investment in agriculture and rural areas has mainly relied on state investment and farmers’ own investment. However, due to the externalities of agricultural social benefits and the relative particularity and complexity of rural business formats, it is difficult to fully cover state investment , and individual farmers have insufficient capacity and strength. Therefore, the relative lack of capital investment in agriculture and rural areas has always been a constraint on development. It is also an important bottleneck that urgently needs to be broken through in the revitalization and development of rural areas and the transformation and upgrading of agriculture and rural areas in China.

 

The Guidance emphasizes the need to guide social capital to invest in agriculture and rural areas in an orderly manner, and accelerate the formation of a diversified investment pattern for rural revitalization. China's agriculture and rural areas are in a critical period of historical transformation. The intergenerational revolution of farmers, the reorganization of agricultural elements, and the integration of urban and rural areas are bringing about the possibility of agricultural connotation, functional changes, and increased investment returns, as well as opportunities for the manifestation and promotion of rural values.

 

Zhu Jing believed that the Guidance clearly points out the key industries and fields of social capital investment, from production to processing, from circulation to services, from digital construction to entrepreneurship and innovation, and from infrastructure to talent training. It can be said that it is full chain and wide coverage. At the same time, the Guidance specifically pointed out that it is particularly important to establish a close cooperation mechanism for mutual benefit. Capital is profit-seeking, while agriculture and rural areas bear social responsibilities such as food security, environmental protection, and social stability to a greater extent.

 

All localities should fully incorporate local actual conditions, formulate and issue corresponding specific plans, clarify external goals, and internalize incentive mechanisms in the process of implementing the spirit of the notice and deepening the actual implementation. It should adopt models such as PPP model, regional overall development model to effectively guide and regulate social capital while making full use of market opportunities, maximizing value creation and reasonable profits, and effectively taking into account and actively assisting the realization of these social goals at the same time.

 

Cultivate rural revitalization projects suitable for PPP model

 

The Guidance clearly innovates PPP model. Actively explore public welfare projects with stable income in the agricultural and rural areas, promote the implementation path and mechanism of PPP model, and make social capital investment predictable, rewarding, sustainable. Promote cooperation between government and social capital in an orderly manner according to laws and regulations.

 

At the same time, the Guidance encouraged agricultural and rural departments at all levels to systematically sort out agricultural investment projects in the region in accordance with the requirements of the relevant documents of the agricultural government and social capital cooperation, select and cultivate rural revitalization projects suitable for PPP model, and give priority to supporting agricultural and rural areas infrastructure construction and other public welfare projects with certain benefits. It encouraged social capital to explore ways such as asset securitization, equity transfer to revitalize project stock assets and enrich capital entry and exit channels. It also encourages credit and insurance institutions to increase innovation in financial products and services, and to carry out pilot investment and financing models such as investment-loan linkage and integration of investment-loan insurance discounts.

 

Yin Yulong, academician of the Chinese Academy of Engineering, taking pig production capacity as an example, he believes that PPP model will help improve the infrastructure of the livestock industry, fully stimulate market vitality, and help further expand pig production capacity and increase investment in deep processing. It can promote the rational layout of large-scale breeding farms, improve the development model of the entire industry chain, improve the production level of animal husbandry, and better protect "tip of safety" for people.

 

Zhou Jinsong, equity director of the Agricultural Development Bank of China, said that the adoption of PPP model can make better use of the leveraging effect of fiscal funds, and give full play to the role of social capital, in order to make agricultural investment in social capital predictable, rewarding and sustainable. Establish a mechanism for closely linking the interests of farmers and social capital, increase financial services to support rural revitalization, and in particular, continue to innovate policy-based financial services for "agriculture, rural areas and farmers" products and support methods. Widely participate the construction of rural infrastructure, the improvement of rural human settlements and the development of industrial integration. Contribute to the benefit of agriculture, and form a joint force from multiple parties to jointly promote the overall revitalization of the countryside.

 

Zhao Gang from the Credit Management Department of the Agricultural Bank of China also believed that the Guidance clarify the cooperation platform and information mechanism for social capital investment in agriculture and rural areas, innovate the PPP model, and strengthen various policy incentives such as land use and money, which will effectively solve the inherent problems of hard selection of agricultural and rural projects, poor access to land, and difficult financing. At the same time, the Guidance guide the establishment of models for the entire industry chain and regional overall development, which will strengthen the connection between the main force of rural revitalization and the interests of poor households, and effectively reduce the investment cost of industrial projects. It is of great significance to help rural areas develop simultaneously, reduce the imbalance of urban and rural development, create more nearby jobs, and improve rural hematopoietic function.

 

In addition, in order to better promote the entry of social capital into the countryside, Lian Ping, chief strategy consultant of Zhongzhi Enterprise Group, chief economist of Zhixin Investment and dean of the research institute, even proposed that it can explore a regional project trading platform. He believed that the PPP model and other market-oriented methods are used to revitalize the stock assets of the project and enrich the capital entry and exit channels. It adopted appropriate tax and fee preferential policies, encouraged all types of commercial banks to set up investment companies for rural areas, developed investment and loan linkage businesses, and increased efforts from banking industry to support the rural revitalization strategy.

 

Source: China Finance News

 

 


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