Ukrainian agrarians get affordable credits

Since the beginning of 2013, Ukrainian agricultural producers have received 13 billion UAH of credits, an increase of 3 billion UAH, year-on-year. Some 2,600  farm enterprises and farmers this year have used bank loans, according to the Ministry of Agrarian Policy and Food, the Information-Analytical Bulletin of the Cabinet of Ministers of Ukraine informs.

In the overall structure of the funds raised by agrarians, 8.1 billion UAH are short-term credit lines, nearly 2.2 billion UAH are medium-term and UAH 2.7 billion are long-term credit lines. However, lending rates for Ukrainian agricultural producers are quite high. To solve this problem in Ukraine, on July 2, 2012 the government decided to establish the State Land Bank (Goszembank).

Government analysts say the bank is established to implement the new mechanism of agricultural sector crediting and to provide agrarians with affordable financing. In other words, it is an instrument enabling farmers to raise credit funds at lower interest rates. The Agriculture Ministry experts say that the bank will provide loans at 10% per annum.

"Financial support for agrarians remains an important issue. Therefore, the Ministry on behalf of the President of Ukraine strongly promotes crediting for agrarians. The agency is working to simplify the mechanisms for credit funds raising," Mykola Prysyazhnyuk, Minister of Agrarian Policy and Food of Ukraine, said. 

The law on the legal status has been signed and the Board structure of a new financial institution has been decided on (Acting Chairman of the Board and the members of the Supervisory Board are appointed by the president and Verkhovna Rada). To form the authorized capital, 120 million UAH were transferred to a temporary account of Goszembank. In addition, according to government experts, the resource base of the Bank will consist of the issue of land bank bonds amounting to 27 billion UAH, transfers to land operating leases amounting (1.8 billion UAH), funds raised from individuals and legal entities (4 billion UAH), and external borrowing (15 billion UAH).