Financing possibilities for Hungarian ag sector
Over the past year there has been a steady increase in the agriculture and food business loan portfolio due to the fact that commercial banks are seeing the necessity, importance and return of agricultural funding. This year a number of options to raise funds in the agriculture and food business sector will be at the farmers’ disposal. The Prime Minister’s plan is to announce and publish all of the tenders for the remainder of the EU’s 2014 – 2020 financial period till the 31st of March. Accordingly a larger number of applications are expected in the next 2 months.
OTP bank offers the so-called “Pályazzunk Együtt Program” (“Let’s Tender Together Program”), which helps agricultural organizations with the application process to receive EU finds. In the last three months more than 2,000 enterprises have joined this program, however it has to be mentioned that it mainly facilitates access to EU funds of domestic SMEs. OTP bank also offers the “Green Card” loans, which allow a loan of up to 122,000 HUF / ha in cases where there is SAPS support and assistance of the greening component at a time of economic pre-financing. The young farmer aid per hectare is increasing to HUF 36,400. Important detail is that the EU subsidies themselves serve as collateral for these loans.
Then there is the Széchényi card, which entitles its owners to an overdraft over a period of one year up to a certain pre-approved limit with a preferential interest rate, which serves in addition to state aid. However with this card it is also possible to apply for additional loans, which also have a preferential interest rate and quicker processing time for the card owners.
In December 2016, Mihaly Varga minister of Foreign trade in Hungary signed a credit agreement with the European Investment Bank, which gives Hungary a EUR 400 million credit to use up until the end of 2020. The contract provides the refinancing of national central budgetary resources for the projects under the EU RDP for the 2014-2020 programming period. These sources should mainly be used for farms and businesses, as well as the development of forest areas, restoring damages by natural disasters, agricultural land, purchase of fixed assets, as well as for related training and skills development activities.
In addition to the above-mentioned forms of support the Agri-environmental payments (AKG), the affected areas with natural handicaps (THÉT) and Natura 2000 compensation payments are also possible with funding of up to 70 percent. Also new this year is that factoring has become possible in addition to area payments and other agricultural subsidies. These are applicable for the livestock sector, coupled direct payments, the rice production – transitional national programs and animal welfare contributions linked to the single area payment scheme for farmers, which are accessible funds before the actual payments.
Sources: Agroberichten Buitenland, agrotrend.hu, szechenyikartyaigenyles.hu, agrarszektor.hu, piacesprofit.hu