OTP Bank issued a first investment loan for the purchase of agricultural land
OTP BANK JSC has signed its first agreement with a Ukrainian agricultural enterprise to finance the purchase of agricultural land. The farm “Prolisok Kalynivshchyny” received a total financing limit of UAH 6.5 million, which has already been used to purchase the first 58 hectares.
“Purchasing agricultural land is a significant investment in the development of one’s business, requiring substantial financial resources. OTP BANK is always ready to support Ukrainian agricultural enterprises and offers to clients a special loan program to attract funds for acquiring agricultural land. We take an individualized approach to each client, helping them select the best terms,” - said manager of OTP BANK`s project “Agro Factory” Ivan Yerko.
He noted that financing for the purchase of agricultural land is provided for up to 7 years, with a 20% advance payment.
The Bank’s clients can also take advantage of the government program “Affordable Loans 5-7-9%” to secure funds for land acquisition. Additionally, financing is available under the Risk Sharing Program, which OTP BANK implements in collaboration with the European Bank for Reconstruction and Development (EBRD).
“Our farm primarily focuses on crop production. We grow sunflower, soybeans, and rapeseed. We decided to purchase agricultural land to increase our business efficiency. Now, we can consider various long-term projects and invest in the further development of our enterprise. Moreover, the value of land is only going to rise, making this an advantageous investment in any case. Naturally, securing financing in today’s conditions is challenging, and our own funds are almost insufficient. That’s why we turned to OTP BANK for a loan. The Bank offers special terms specifically for land purchases. These terms are beneficial for us because the loan is provided for a relatively long period, allowing us to gradually repay it while already owning the land,” - noted Oleg Dmukhovskyi, director of “Prolisok Kalynivshchyny.”
I. Yerko emphasized that investing in land offers several significant advantages: “Buying agricultural land reduces the cost of production. According to our calculations, when purchasing land on a seven-year loan, the farmer will pay an amount equivalent to what they would pay for renting plots. However, they will already own the land, making their business more resilient. Additionally, the land will increase in value, providing an investment profit as the asset’s value grows. For example, the cost of 1 hectare of agricultural land in Poland is €12,000, and in Romania − €7,600. In Ukraine, the current average price per hectare is €1,500. This indicates significant growth potential.”
According to the head of “Agro Factory,” buying land encourages farmers to invest more confidently in it, such as planting orchards, developing organic production, or investing in irrigation systems. Moreover, by becoming landowners, farmers tend to manage their land more carefully, adhering to sustainable farming practices and crop rotation. Such clients become more financially stable and appealing to banks for new financing opportunities.
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Public Joint Stock Company OTP Bank is a subsidiary of OTP Bank, which is the largest independent Central-Eastern-European banking group. JSC OTP Bank is one of the largest domestic banks, a recognized leader in the financial sector of Ukraine. The Bank provides a full range of financial services to corporate and private customers, as well as to small and medium enterprises. The bank entered the Ukrainian market in 1998, and since then it enjoys a staunch reputation of socially responsible, reliable and stable institution providing its consumers with services of European quality standard.
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