OREANDA-NEWS. July 28, 2011. Since January this year, ICBC fully embraces innovation in extending loans to support the growth of small enterprises engaging in agricultural production, paying particular attention on the support to "Agriculture, Farmers and Rural Areas" and the coordinated development of regional economy. Citing Heilongjiang as an example. Through the launch of commodity finance model, ICBC lends intensive support to the small-scale grain processing enterprises in the Great Northern Wilderness of China. The result is encouraging, reported the press-centre of ICBC.

As of today, ICBC has disbursed a total of RMB 150 million in loans to the agricultural small enterprises in Heilongjiang. The loans not only address the immediate need of these small enterprises, but provide job opportunities for the local farmers to earn more when they are not busy in the fields.

An ICBC executive said, a study conducted by the Bank on Heilongjiang's Great Northern Wilderness pointed out the problem facing the small-scale grain processing enterprises. Most of the Heilongjiang grains are transported out of the province as raw grains, which means a big drop on the value-added value despite the high rate of commercialization of agricultural products in the area. Main reason behind is the lack of funding for the small-scale grain processing enterprises to buy and process more grains. Moreover, these enterprises cannot supply necessary collateral to apply for loans, hence, their processing business is strictly hampered.

To address this issue, ICBC offers a commodity finance solution for the eligible small-scale grain processing enterprises in the Heilongjiang's Great Northern Wilderness to use grain as the collateral for loan application. In other words, they pledge their unmilled rice to ICBC, ICBC then offers loans referencing the market value of the rice. Since most of the grain processing enterprises start operation during the slack season in farming, hence the commodity finance solution of ICBC brings two benefits. To the enterprises, the ICBC loan helps solve their immediate need of funds, while to the farmers, they can earn more, "Busy during the slack season". Meanwhile, the enterprises use the ICBC loan to process more raw grain into finished food grains, turning commodity grain into true "grain commodity". In the end, this adds value to the grain and raises the profitability of the processing enterprise.

At this stage, ICBC is taking one step further by applying this commodity finance model of addressing funding need of small agricultural businesses to other grain production/processing sectors in Heilongjiang. ICBC aims to contribute its share in driving the mass production of agriculture products and the coordinated development of regional economy.