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Julius Ivaška, director of the Commercial Department of Medicinos Bankas, says that the end of winter and spring are the peak of financing for farmers, according to the report.
“Investors in the acquisition of land and the necessary equipment are usually planned by farmers in the autumn, after the harvest, because it allows to objectively assess the situation and its real potential, as well as the need to expand or renovate. Farmers are currently one of the banks’ most active clients and the financial sector is experiencing its seasonal peak in financing, ”says a Medicinos Bankas representative.
Like households that accumulated record savings in 2020, the financial situation in Lithuania is evaluated positively by banks operating in Lithuania, according to the latest survey by the country’s central bank. According to J. Ivaška, the financing of farmers and agricultural companies forms an increasing part of the loan portfolio.
At the same time, the financing expert points out that the priorities of the farmers themselves are changing: last year more than 2,600 million. There is relatively active internal migration in the euro-denominated sector.
“The most active are the cereal producers, the farmers of the Panevėžys, Pasvalys, Kupiškis and Anykščiai districts. Where there is the most fertile land, crop production is the most popular, where dairy farming and animal husbandry are less fertile. However, we are observing a general trend that due to low purchase prices, dairy farms in the country are declining, a significant number of farmers are withdrawing from this business and decide to try themselves in animal husbandry or production of crops ”, says J. Ivaška. .
Small farmers who see prospects in agriculture have recently been actively looking to acquire ownership of the land, as they find it difficult to outwit large farmers who can pay a higher rent.
“As land rents increase, small farmers are trying to buy land so they are no longer dependent on landowners, to whom large farmers or cooperatives can easily offer higher rents. As a result, the volume of financing for the acquisition of land is growing. At the same time, after investing part of the funds in economic development, modernization, acquisition of fixed assets, additional revolving funds are needed to regulate financial flows “, J. Ivaška draws trends.
According to him, the amount of agricultural financing did not decrease during the COVID-19 coronavirus pandemic, they are only maintaining the growth trend. It is true that although farms are expanding and modernizing, there is currently not such a big boom in the purchase of new machinery, as European support is already financing only a small proportion of these projects.
According to Medicinos Bankas, the most popular financing solutions for agricultural companies are loans with a mortgage and without land appraisal. If there is a need for short-term financing, the most demanded credit linked to the payments of the National Payment Agency (NPA) without pledging tangible assets. Currently, loans and leases secured by the Agricultural Loan Guarantee Fund (RAGF) are very popular, because the interest and the security deposit are repaid.
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