Research Background
The Agriculture, Forestry and Fisheries Credit Guarantee Fund (Nongshinbo) was established and has been run since 1971, to enhance credit of farm and fishery households by providing credit guarantees based on fund’s underlying assets to financial institutes. Recently, as the structure of agriculture changes and the agricultural policy fields are expanding, a demand for role enhancement of Nongshinbo is increasing. However, some people cast doubt on the effectiveness of Nongshinbo in that the ratio of guarantee utilization of Nongshinbo is low of 3.68. They say that the Nongshinbo is not fulfilling its purpose sufficiently, because of its conservative management in solving the credit crunch problems in the agriculture sector. We need to point out the reasons and set direction to make the Nongshinbo strengthen its role by counteracting actively the changes in the environment.

Method of Research
We presented the statistics on the fund raising, credit guarantee, subrogation payment and so on to understand the operational status of Nongshinbo. In addition, we draw implications by reviewing the other credit guarantee funds such as Korea Technology Finance Corporation and the credit guarantee system in the U.S. We suggested main results of the farm survey to analyze the condition of the Nongshinbo credit use and examined the accomplishment of the Nongshinbo in terms of credit easing of farm households and the financial institution solvency. The performing deficiencies of the Nongshinbo have also been inspected. We propose the basic direction for enhancing the role of Nongshinbo under the changing circumstances.
Conclusion and Implication of Research
The amount of credit guaranteed loan for one year was up to 12.4 trillion won before and after the year 2001 in which the policy for farm household debt problems has been implemented. However, as the subrogation payment was expanding due to an insolvency of farm household, the total amount of credit guaranteed loan has declined since 2007, following the tightening qualifications. The proportion of governmental funds credit to all funds credit in the guaranteed loan is 63% at the end of 2013 showing that the credit guarantee is focusing on the governmental funds.
The Nongshinbo has played some important roles such as broadening the supply of credit to farm households who have low credit and dropping the rate of loan and expanding solvency of the farm households. In implementing the agricultural policies, the Nongshinbo improved the policy effect by increasing the size of loan etc. Nevertheless, it is still unsatisfactory in credit easing due to the low ratio of guarantee utilization of Nongshinbo and the lack of expertise in evaluation of business value. The separated structure between the credit guarantee organizations and the lending organizations, the lack of connection with the agricultural policy, and less diversity of business are tasks to be dealt with.
In recent years, Korean farm households have been confronted with changes in agricultural environment along with lasting low interest rates, changes in agricultural policy for exports of agricultural products or agricultural technology and so on. We suggest five basic directions for enhancement of the role of the Nongshinbo. First, we should supplement Nongshinbo’s credit guarantee system to revitalize investment and prevent worsening profitability in the agricultural sector. Second, we should widen the range of the credit guarantee beneficiaries in response to the changes in agricultural structure. Third, the enlargement of the credit guarantee business areas that are necessary to agriculture is needed. Fourth, the management system to strengthen the connection between the credit guarantee system and the agricultural policy has to be constructed. Fifth, we should reorganize the management system of Nongshinbo to improve the speciality and promote the continued work innovation.
To be specific, the avoidance of borrowers has to be minimized by increasing the ratio of partial guarantee from 85% to 90% and definitizing considerations for subrogation payment decision. To enlarge the credit guarantee business area, we should introduce the system that relates investment to the credit guarantee and credit guarantee insurance system to broaden the business range. The high-dimensional cooperative system between the Ministry of Agriculture, Food and Rural Affairs and Financial Services Commission is needed to strengthen the connection between them. Finally, some methods should be considered to enhance independence of the Nongshinbo whose administration is now consigned to National Agricultural Cooperative Federation, and furthermore, Nongshinbo should be an independent institution.

Researchers: Hwang Eui-sik, Lim Ji-eun
Research period: 2014. 1. ～ 2014. 12.
E-mail address: eshwang@krei.re.kr