Loans of 10 million Euros taken as part of the "First Silo" program

• The capitalization of the Guarantee Fund, less than 10% of the initial amount

Farmers took out loans of 10 million Euros as part of the "First Loan" program, the officials of the Fund for the Guarantee of Rural Loans said for BURSA.

The "First Silo" program has yet to gain critical mass, they added, but the reason is the fact that the program was only launched last summer. Because of this, only two banks provided loans under the program and the Guarantee Fund has not yet received the capitalization it was promised.

Even though the Ministry of Agriculture had earmarked 42 million lei for the fund, but the amount that the FGCR received was less than 10% of that amount.

"Given the fact that this program only became operational a short time ago, the fund did not receive the initially promised amount of 42 million lei,", the officials of the FGCR said, adding: "The amount which was effectively allocated is 3.4 million lei, while the value of the storage certificates issued by silo operators which were used as loan collaterals is 53 million lei".

The officials of the FGCR said that the amount allocated so far is in line with the number of storage certificates issued, with the remaining 38.6 million lei to be released over the course of 2010.

So far, 90 storage certificates were issued for a volume of 98,212 tons of seeds, which were used to secure bank loans amounting to 10 million Euros.

Out of the 94 silo operators that obtained storage licenses, only 11 requested the issue of 1150 storage certificates.

• Loans to take off in 2010

The Guarantee Fund estimates however, that this year, the volume of loans taken as part of the "First Silo" program will rise, as will the involvement of the commercial banks, once trading of the storage certificates begins on the Romanian Commodities Exchange (BRM).

"It is to be expected that starting this year the retail banks will expand lending, as a result of having these storage certificates", the officials of the Guarantee Fund said, who added: "Once the Commodities Exchange gets involved, the number of banks looking to get involved in this program will most likely increase significantly".

• The Romanian Commodities Exchange is ready to begin trading

The Guarantee Fund has already signed a collaboration protocol with CEC Bank, BRD, and the Romanian Commodities Exchange, to begin trading of storage certificates.

Following this protocol, the Exchange drew up the Regulation for the trading of the storage certificates for grains, said Septimiu Stoica, the chairman of the BRM.

Septimiu Stoica said: "We expect trading of storage certificates to begin soon on the commodities exchange. We signed a convention with CEC Bank, we"re due to sign with BRD, and we got positive signals from several commercial banks that they plan to join the program. We are convinced that this project will be successful, and we hope to have collaterals traded on the floor, rather than directly".