Ukraine looks to reinvigorate land market
MOSCOW. Jan 26 (Interfax) - The activity of the Partial Credit Guarantee Fund in Agriculture (PCGF) will help revitalize the land market in Ukraine, Minister of Agrarian Policy and Food Nikolai Solsky said in a statement to Ukrainian media.
"The fund is assisting, among other things, the land market. It helps those who have the least hectares in cultivation to receive loans, in particular, for the purchase of land right now," he said.
The purchase of land in the structure of farmers' current expenditures is by no means in the first place, Solsky said. "This is not a problem. It is the thirtieth issue. They spend less than 1% of what they spend during the year. Look at last year's figures for comparison. We had a $100-million land market last year [total monetary value of all farmland purchase/sale agreements], and we bought $1.5 billion worth of new agricultural equipment. I'm not talking about the amounts spent on fertilizer, seeds, rent, and other things. There is no need to make a problem where there is none," Solsky said.
The PCGF is designed to help the smallest market participants and will put them on an equal footing with others, Solsky said.
"It's true that the average [farmer] is more interesting for the bank. He has more current assets, he can be given a larger loan, he can earn more," Solsky said.
He also expressed confidence that the Fund will help micro- and small farmers to normalize the paperwork. In addition, the guarantees issued to the farmers will allow them to get larger amounts than the collateral they have.
"For the smallest farmer, it means that if he has one tractor, he can additionally take a loan for twice as much as that tractor is worth. This is a kind of privilege that will allow one to spend money for development, for current assets and for the purchase of land," Solsky said.
As reported, as part of the second stage of implementing the land market in Ukraine, the PCGF started operating and its activities will be aimed at supporting small farmers who cultivate land plots of up to 500 hectares.
The Fund will assist in purchasing farmland, financing agricultural machinery and equipment, and meeting the operational needs of small farms. The PCGF provides guarantees to Ukrainian banks covering up to 50% of the borrower's obligations under investment loans and current capital financing loans. Borrowers will be able to obtain current capital loans for up to three years, investment loans for up to seven years and land purchase loans for up to 10 years. The maximum loan amount will not exceed $800,000 per borrower. An entity should meet the fund's requirements and the World Bank's environmental and social requirements. In addition, the farmer should be registered in the State Agrarian Register (SAR).
According to the fund, 17,700 small farmers in Ukraine will be able to use this instrument.