An investigative report from Zhinong Net, translated by CDT:
A farmers cooperative association in Yushutai Township of Lishu County in Jilin Province caught the attention of media and Zhongnanhai. The Party’s number one document of this year encourages the development of such associations.
Baixin Cooperative Association, now a group of 43 households, started with eight rural families in Yanjia Village and now has four groups of operation: agricultural machine group, study group, funding self-assistance group and running water group.
In April 2004, eight core households each invested 2,000 yuan into the association and, with a 8,000 yuan loan from a rural cooperative (bank), collected 16,000 yuan in total to buy an precise seeding machine. Eight families used the machine on a rotating basis, with the user responsible for filling gas and taking care of maintenance while using it. Savings out of the machine, according to farmers’ estimates, were significant in seeds, fertilizer and reduced hiring of other farmers. Each family increased their income by 2,500 yuan. [Full Text in Chinese]
The funding self-assistance, a bank-like group, is the biggest attraction. With 43 participant families, farmers invest 200-400 yuan and non-farmer participants invest 500-1,000 yuan into the fund. Participants are encouraged to borrow short-term loans from the fund. If a borrower pays back the loan in 10 days, a service fee will be charged only. If the loan is repaid in a year, an interest rate slightly lower than local credit cooperative will apply; the rate will be higher than that of the credit cooperative if the loan is more than a year.
Now with 31,200 yuan in the fund since establishment in July 2004, the group issued 17 loans in its first year and all the loans were repaid by the end of 2005.
The running water group, after collecting 30,000 yuan from villagers, drilled a deep water well that cost 150,000 yuan, with major investment coming from local government. This solved the problem of high concentration of fluorin in surface underground water, which is why local farmers mostly have yellowish teeth. The deep water well also serves as an anti-drought tool.
See also the author’s “Farmers’ self-motivated financial innovation (in Chinese)”
