The volume of subsidies for preferential lending to the agricultural sector will increase by 45 billion rubles

The Bank of RUSSIA decided to increase the key rate by 100 bp. to 13% per annum last week, in August the regulator increased it from 8.5% to 12%. Due to the increase in rates,  the Ministry of Agriculture  suspended preferential lending to the agricultural sector - both short-term and investment. The HEAD of the ministry, Dmitry Patrushev, recently spoke in the State Duma that thanks to joint work with the Ministry of Finance, sources of additional financing were found and preferential lending could be resumed by the end of September. Previously, the department assumed that lending would recover by the end of the year.

Agricultural producers previously interviewed by Agroinvestor said that preferential loans are the only significant form of government support, and many of them took out such loans at a rate that was below 5%. The general DIRECTOR of the Steppe agricultural holding, Andrey Neduzhko, noted that the rise in the cost of borrowed money will have a negative impact on the economy of the industry and will lead to a reduction in profitability. 

At the end of August, Nikolai Shcherbakov, general director of the Kuban Gardeners union, told RBC that the rate increase would affect primarily the number of short-term revolving loans that farmers take out during the season. This, in turn, will lead to a decrease in the competitiveness of domestic agricultural producers. “We will take out less loans, we will build less fruit storage facilities, we will be less competitive with foreign producers. It is necessary to increase the bank of preferential lending for farmers - that’s the way out,” Shcherbakov noted.

The preferential lending program for the agricultural sector was launched in 2017: since then, agricultural producers can take out short-term (for one year) or investment (from two to 15 years) loans at a rate of up to 5%. They are issued for the development of crop and livestock production, as well as for the construction, reconstruction and modernization of processing enterprises.

The Ministry of Agriculture has repeatedly called the measure highly effective and in demand. As Deputy Head of the Ministry Elena Fastova noted, in the first five years of the program, the volume of short-term concessional loans issued to farmers increased multiple times: if in 2017 they were issued for 137 billion rubles, then in 2022 - already by 913 billion rubles. In the summer, the Ministry of Agriculture proposed increasing the maximum rate on preferential loans from 5% to 7%, and also proposed reducing the amount of subsidies to banks from 100% to 70% of the key rate when issuing short-term loans. However, the project was then updated; the new version suggests that now growers who raise borrowed funds to purchase fuel, seeds, plant protection products, fertilizers and other necessary materials must insure at least 50% of the area of ​​land intended for agricultural crops.