Georgian Ministry of Agriculture Increases Access to Agricultural Loans for Vegetable and Grain Producers


Georgian Ministry of Agriculture Increases Access to Agricultural Loans for Vegetable and Grain Producers

04/27/2020

The changes imply full co-financing by the state of interest on loans in the amount of 5 thousand to 100 thousand lari ($ 1.6 thousand – $ 31.3 thousand)

The Government of Georgia approved a number of amendments to the “Preferential Agricultural Loan” project, which is part of the “Unified Agricultural Project” implemented by the state in support of farmers and agricultural producers.

As Levan Davitashvili, Minister of Environment and Agriculture of Georgia, noted, one of the important changes to the “Preferential agrocredit” project is the introduction of a component that allows farmers involved in the cultivation of annual crops, in particular vegetables and grains, to take interest-free bank loans for working capital funds, that is, for operating expenses in connection with production.
“We introduced a new component, which implies full co-financing by the state of interest on loans in the amount of 5 thousand to 100 thousand lari ($ 1.6 thousand – $ 31.3 thousand). You know that our co-financing did not previously apply to working capital. But annual crops – vegetables, cereals, are very relevant today, this is what the population can produce in the shortest possible time. And interest rates on loans for working capital are currently quite high, often above 10%. Now we, in fact, provide farmers with free money for growing annual crops. We think that with this important decision, we will significantly facilitate the access of farmers to financial resources, this will help many thousands of people. I think that this will allow farmers to mobilize much more financial resources than any direct grant assistance from the state, ”the minister said.

As noted by the Ministry of Environment and Agriculture, full co-financing by the state of the interest rate on the aforementioned loans is provided for 6 months, and the farmers will be able to cover the bulk of the debt after the sale of the crop. It is expected that in 2020 about 5 thousand beneficiaries will be able to use this program.

According to the ministry, the changes also included the growth of state co-financing of interest on agricultural loans for fixed assets: from the existing 8% to 11% per annum. Such co-financing is provided for a period of 48 months. The percentage of state co-financing of leasing has also been increased – from the existing 9% to 12% per annum.

The project also introduced a new subcomponent – financing of the food industry (including enterprises for the processing of grapes, for the production of bread, bakery products and pasta). Within the framework of this subcomponent, loans will be provided in the amount of from 1 million 500 thousand 001 GEL to 5 million GEL ($ 469 thousand – $ 1 million 563 thousand). State co-financing of the interest rate on such loans will be at the level of 10% per annum for 24 months. For agro-leasing in the food industry sector, state co-financing will amount to 12% per annum over 24 months.

Read also: 50 Georgian farmers and agricultural producers have already received agricultural grants under the ENPARD III program

To support the livestock industry, a subcomponent of secondary state support for meat production has been added to the “Preferential agricultural loan” – if the farmer does not have enough collateral to secure a loan for working capital, the state is ready to provide 50% collateral.

The project “Preferential agricultural loan” has been carried out by the state for more than 6 years.

It should be noted that the changes made to the micro-grant program implemented by the Ministry of Economy and Sustainable Development of Georgia also extended to certain categories of agricultural production. “This program involved the issuance of grants in the amount of up to 20 thousand lari ($ 6.3 thousand) to start certain types of economic activity, including in the countryside. Now the maximum size of these grants has been increased to 30 thousand lari ($ 9.4 thousand), ”Levan Davitashvili noted.
All of the above changes have been adopted within the framework of the Anti-Crisis Plan approved by the government of the country, which includes comprehensive measures to phase out the country from the crisis as a result of the Covid-19 coronavirus pandemic – both in the area of ​​healthcare, economy and social security. As Georgia’s Prime Minister Georgy Gaharia, introducing the Anti-Crisis Plan noted, “the country will spend on crisis management, in total, over 3.5 billion GEL ($ 1.1 billion), of which 1.35 billion GEL ($ 0, 4 billion) will be directed to targeted financial social support of citizens, 2.11 billion lari ($ 0.7 billion) – care for the economy and entrepreneurs directly, and 0.35 billion lari ($ 0.1 billion) – care the health of fellow citizens. ”

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