April 2, 2014 — Officials in a top seafood-producing region are attempting to reboot the sector by unblocking a shortage of credit that has long been blamed for restraining the largely privately run seafood sector.
Home to the processing hubs of Qingdao and Yantai, the province of Shandong has announced that a state-owned bank is pioneering a new finance model for the seafood sector to tackle a credit shortage which provincial government blames for “blocking the scale and development” of the province’s export-focused seafood sector. If successful the campaign could result in a new source of growth for China’s seafood sector while also funding firms keen to diversify product ranges and distribution channels for export and domestic markets.
Interviewed by the Shandong-focused Qilu news portal, Qin Dejun, manager of the state-run Agricultural Bank of China in the coastal city of Penglai, said his bank has extended CNY 56 million (USD 9 million, EUR 6.6 million) in loans over the past year to the seafood sector, having devised an effective model of pricing risk for borrowers in the sector.
“We have for a long time been seeing a large number of applications for credit from companies in the seafood sector but it has always been difficult for them to produce adequate amounts of collateral…We have now fixed that problem by engaging a third party firm which prices and guarantees the frozen seafood stocks of each loan applicant.” Frozen seafood stocks can last for up to two years, said Qin, who explained that his bank insists that the frozen stocks of each loan applicant must match the size of the loan in terms of longevity and value. “If we lend CNY 2 million (USD 322.257/EUR 234,110) for a two year term we must be satisfied that the applicant’s stocks match that figure in durability and value.”
Read the full story at SeafoodSource.com