These are the rules for loan moratorium and damage payment due to drought

Some conditions must be met by those who want to use the credit moratorium. (Photo: Pixabay)

A loan moratorium and interest-subsidized loans will help the drought-affected agriculture, and the payments of compensations that can be claimed after insurance will also be speeded up, the Minister of Agriculture said. Insurers must pay a claim advance for drought insurance within 14 days of reporting the claim, and farmers must notify the banks of their request for a credit moratorium by September 15.

The head of the ministry reminded that the government provides farmers with the opportunity to participate in a loan repayment moratorium until December 31, 2023, within the framework of the package of measures adopted by the Drought Hazard Operational Group created to deal with the consequences of the historic drought. Participation in the moratorium can help all those farmers who already have a loan and in the current extraordinary situation see that the maintenance and continuation of their farming activities can only be ensured by temporarily suspending their loan payment obligations.

Those affected must consider for themselves whether they choose to continue paying installments or enter the moratorium with the loan

Farmers have until September 15, 2022 to declare in person at a bank branch or online whether they wish to take advantage of the opportunity. The payment deferral applies to the fulfillment of principal, interest, and fee payment obligations of loans already disbursed based on the credit and loan agreement or financial leasing agreement existing on August 31, 2022. The debtor will receive a payment extension for the performance resulting from the contract from September 1, 2022, until December 31, 2023, underlined István Nagy.
The minister emphasized that the drought causes serious difficulties in all sectors of agriculture, so the measure becomes available not only to agricultural producers, but also to forest farmers and fish farmers. The detailed eligibility conditions are contained in the relevant government regulation. And for agricultural producers who have not had to take out a loan so far or who are currently creditworthy, we recommend using the Agrár Széchenyi Kártya Current Account and the MFB Agrár Current Asset Loan Program 2020, which are supported by the interest rate subsidy of the Ministry of Agriculture. These credit programs will soon become even more favorable for farmers, since the Ministry of Agriculture can increase the interest subsidy frameworks available to farmers by applying the temporary EU rules due to the Russian-Ukrainian war. The aim of the government measures in both cases is to ensure the financing of agricultural works and thereby maintain domestic food security, the head of the ministry pointed out.

The operative body also decided on the out-of-order payment of insurance indemnities, using the tool of the advance payment

Thanks to the new drought emergency regulations created for this purpose, the government is speeding up and making the insurance compensation process more flexible, thereby helping the financing situation of farmers. Farmers who have a plant insurance contract covering drought damage and who have suffered damage have the opportunity to request a compensation advance before the end of the insurance claim settlement process. Farmers engaged in the cultivation of corn or sunflowers are entitled to this advance if the damage they suffer reaches an average of 80% per plant and crop, and they declare this responsibly in their damage report. Claims can only be submitted to the insurance company in electronic form, on a form defined by decree, until October 31, 2022, the minister emphasized.

He added that the insurance company must pay the advance payment within 14 days of the claim notification, the amount of which is at least half of the amount of the compensation that can be determined. It is important that the payment of the compensation advance does not mean that the insurance company does not investigate the actual occurrence of the drought damage and its extent. When determining the final amount of compensation, the difference between the compensation amount and the advance payment must be accounted for by the insurer and the farmer in all cases. István Nagy called the attention of the affected farmers to be as careful as possible when using the advance payment, to attach all necessary documents, and to be available in case of insurance inquiries, as this is the only way to guarantee a quick claim settlement. Insurance companies must provide detailed information on the detailed rules of the damage advance to the affected parties.

The Ministry of Agriculture is doing everything it can to support farmers affected by the drought. A safe food supply is the strategic interest of our country – underlined the minister.

AM, Bank360