China’s agriculture financing has an RMB three trillion gap, according to a report released by the Chinese Academy of Social Sciences (in Chinese). Fintech companies are eyeing the potentially lucrative market but first, they need to overcome the unique challenges that the industry poses.

In China, agriculture accounts for nearly 10% of the GDP but receives less than 1% of conventional bank loans. Farmers in rural areas are one of the groups with the least credit in the financial system and minimal online footprint. Risk is an urgent issue faced by agriculture fintech because of the lack of credit information and existing data for reference.

A well-known anecdote in the agriculture fintech industry goes that a lending platform provided credit based on the number of pigs a farmer owns. One pig was worth RMB 10,000 credit. So a farmer went and borrowed additional pigs from family and friends to get more credit – completely defeating the purpose of risk control.

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Linda Lew

Linda Lew is a Beijing-based journalist who covers technology, start-ups and business in China. You can reach her at lindalew at aliyun dot com.