Among small and medium-sized agricultural producers, interest in lending for the purchase of agricultural land is growing – P. Huzyr
Small and medium-sized agricultural producers are increasing their interest in lending for the purchase of agricultural land. This was stated by project manager of alternative sales channels "AgroFactory" OTP BANK JSC Pavlo Huzyr during the conference «Year of business participation in the land market: what has changed?» organized by the Center for food and land use research at the Kyiv School of Economics (KSE Agrocenter).
«At the end of November 2024 OTP BANK implemented the first loan agreement for the purchase of 58 hectares of agricultural land intended for an agricultural enterprise from the Vinnytsia region. We currently have 12 deals in the works. Two are already at the final stage of signing. One of them is for the purchase of agricultural land in Odesa region for UAH 7 mill. I think that all these 12 deals will be implemented in the first quarter of this year. We see a surge of interest among agricultural enterprises in buying land on credit. Mainly, these clients are representatives of medium-sized agribusinesses that cultivate 1,000 hectares or more of land, although there are requests from micro-businesses as well. Agricultural enterprises in order to receive a loan from OTP BANK must cultivate more than 200 hectares of land, work for more than 3 seasons and have an official profitable activity and a positive credit history», - he told.
Pavlo Huzyr noted that the purchase of land would motivate agricultural producers to treat it more sparingly - to observe crop rotation, grow cover crops, and will also allow farmers to invest in it more confidently, in particular, to plant gardens, develop the production of organic products, invest in irrigation systems.
According to the expert, buying agricultural land on credit is more profitable compared to renting. «According to our calculations, if a farmer buys land on credit for 7 years, he will pay the same amount for repayment of the property and interest as for renting shares. However, in the first case, he will already be the owner of this land, which will make his business more stable and understandable for the Bank. At the same time, the cost of land and its rent will only increase, and therefore, in the long term, the agricultural producer will reduce the cost of growing agricultural products and receive investment income», - Pavlo Huzyr explained.
OTP BANK offers clients a credit program for attracting funds for the purchase of agricultural land:
- financing is provided for a period of up to 7 years, with an advance payment of 20% or more;
- there is an opportunity to use the state program "Affordable loans 5-7-9%" at a rate of 7% with the possibility of reducing it to 5% per annum;
- you can get financing under the Risk Sharing Program, which OTP BANK implements in cooperation with the European Bank for Reconstruction and Development.
More information about the loan program for the purchase of agricultural land can be found at the following link.
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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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