MADR increases the value of lending to farmers

The Ministry of Agriculture and Rural Development has increased to 5 times the subsidy, the amount of credit that farmers can access under advantageous conditions, based on the certificates issued by the Agency for Payments and Interventions in Agriculture (APIA).

"Following discussions with farmers and consultations with representatives of the banking environment, we have increased the amount of state-guaranteed loans that farmers can request based on certificates issued by APIA. Thus, the "3 times the subsidy program" becomes the "5 times the subsidy program", which means that farmers can now apply for credits equivalent to the amount of the subsidy due for 5 years. This instrument offers farmers the much-needed working capital, at a very good interest rate, but also the predictability they need to develop their business, given that the allocation ceiling is guaranteed by the Ministry of Agriculture through the Credit Guarantee Fund Rural (FGCR). The FGCR has already concluded working agreements for guaranteeing the "5 times the subsidy" credits with 7 financing institutions, and with another 3 financing institutions, the agreements are being signed", Minister Florin Barbu said yesterday.

Loans are granted for the financing of current activity/working capital in agriculture, both in the plant and livestock sectors, for improvement measures, welfare measures and coupled support schemes for animal husbandry (SCZ), based on certificates issued by APIA.

In the case of loans granted under the "5 times the subsidy" program, FGCR offers the following guarantees:

a) up to 80% of the value of new loans granted:

- beneficiaries who do not have financing based on the certificate issued by APIA, nor have they received an advance based on it, and who cannot exceed 5 times the maximum allowed percentage of the value of the certificate;

- beneficiaries who do not have financing based on the certificate issued by APIA and who have received an advance/full payment that cannot exceed 4 times the maximum allowed percentage of the certificate's value; this provision applies until APIA issues the certificates related to the following agricultural year;

b) up to 80% of the amount by which the value of the loan granted without FGCR guarantee is increased, in the case of loans granted prior to the guarantee request, based on the certificates issued by APIA, for which the financing institution approved the value increase up to the competition of the maximum value of 5 times the maximum allowed percentage of the value of the certificate issued by APIA and for which the beneficiary did not collect an advance.

Given that the previous program, "Three times the subsidy", was approved last summer, at the initiative of Petre Daea, former Minister of Agriculture, based on the current increase, we expect that the future Minister of Agriculture, who will replace Florin Barbu, to approve a new increase and to reach a "7 times the subsidy" credit.

As long as the unpaid credits will finally be paid from the European funds allocated on the Common Agricultural Policy, we do not see why, by the end of the decade, the credits should not reach "10 times the subsidy". The banking system in our country has enough money and the possible holes in non-performing loans granted to small farmers will be covered by European funds.

We mention that last year, FGCR granted guarantees of over 400 million lei for the "3 times the subsidy" program.

We are curious what the European Commission has to say about such a support scheme.