Ukrainian government has set up a partial credit guarantee fund for agriculture
Today, the Cabinet of Ministers of Ukraine, by its resolution, established the Fund for Partial Guarantee of Loans in Agriculture, approved its Charter and ensured the formation of the authorized capital.
This was announced by the Minister of Agrarian Policy and Food of Ukraine Roman Leshchenko.
According to the Minister, the Fund is called to radically change the rules of the game in the financial sector in favour of small agricultural producers.
We are creating modern tools to support small farmers, because small agricultural producers are the basis of food security in our country: they produce more than 50% of all agricultural products. The launch of the Partial Credit Guarantee Fund will significantly reduce the risks of lending to small farmers for banks. Therefore, interest rates should become more affordable and lending terms should be longer.Roman Leshchenko, Minister of Agrarian Policy and Food of Ukraine
According to him, the lack of a long credit history for many years deprived small agribusinesses of the opportunity to invest in development. Interest rates on loans for them were on average 5-7% higher than for “large” farmers. Therefore, small agricultural producers preferred “short” loans to cover current needs.
Now, the Fund will provide credit guarantees for primary agricultural producers who cultivate no more than 500 hectares of land. Guarantees from the Fund will be provided for up to 10 years in the amount of up to 50% of the outstanding amount of principal to the financial institution. This will significantly reduce the risks of lending to small farmers for banks. As a result, interest rates need to be made more affordable and credit terms need to be extended.
“We want farmers to stay on their land and have all the conditions and opportunities for development. This is how the main mission of land reform is embodied – “Yours on your land!“, – summed up Roman Leshchenko