The regulation of the extraordinary agricultural interest subsidy program has been published

By: STA Date: 2022. 10. 29. 07:34

In accordance with the decision of the Drought Emergency Task Force, an extraordinary agricultural interest subsidy program will be launched to facilitate the financing of working capital for livestock keepers and agricultural producers who have suffered damage as a result of the drought with an interest subsidy of 14 percentage points.

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Within the framework of the Agrár Széchenyi Kártya Current Account Construction, the working capital loan with an extremely favorable interest rate and free use will soon be available for agricultural producers at the registration offices operated by KAVOSZ Zrt., as well as at the distribution banks. The discounted overdraft facility can be applied for by certified drought-damaged plant growers and animal husbandry businesses (including fish farmers) registered in the Breeding Information System. The interest to be paid by the borrowers will be significantly below the level of market interest rates, thanks to the preferential interest subsidy of up to 14 percentage points/year provided by the Ministry of Agriculture. The loan can be taken out with a term of up to 3 years, providing an opportunity to manage liquidity and profitability problems. The priority support provided by the Ministry of Agriculture can be used in the case of new loans that came into effect by December 31, 2022, according to the current support legislation, and loan exchange is possible according to the business rules of the Agrár Széchenyi Card.

Important information

The expected extension of the EU support legal basis for the interest subsidy, which has become known in the meantime, will allow the Ministry of Agriculture to extend the effective date of the loans on which the support is based until March 31, 2023, with a subsequent amendment to the decree. Priority interest support can be provided primarily under the title of temporary crisis support introduced in connection with the Ukrainian crisis, or, in the absence of its conditions, under the title of support of a small amount. The EU subsidy title, which serves as the basis of the interest subsidy and was introduced in connection with the Ukrainian crisis, currently has a limit of EUR 62,000 in connection with agricultural production – depending on the euro-forint exchange rate – it makes it possible to take out a 3-year loan of about HUF 60-65 million with such an interest subsidy. At the same time, we realistically expect that, in addition to the temporal extension, the amount of support that can be provided will increase significantly, which will mean the opportunity for farmers to take out loans with significantly higher interest rates.

Loan applications (application forms) can be submitted in the registration offices operated by KAVOSZ Zrt., as before. The detailed terms and conditions of the special support loan can be found on the website www.kavosz.hu. For loan applications, the proof of drought damage is the certificate of drought damage from the county government office acting in the field of agricultural administration, while the proof of animal husbandry quality is a copy of Breeding Certificate No. 1350, available in TIR, issued no older than half a year before the submission of the application form, and at the time of submitting the application it is done by submitting a statement on the conformity of the data included in it with reality.

According to the intention of the Ministry of Agriculture, this highly discounted loan scheme will contribute to the management of the difficulties faced by agricultural producers this year and to the effective financing of the increased demand for working capital in production, thus ultimately preserving food security.