Despite many challenges, unprecedented support opportunities in agriculture

According to the experts present, in order to draw on as many resources as possible, thorough planning, expert assistance and rapid administration are needed, in which everyone from agricultural enterprises to credit institutions to the authorities must cooperate effectively.

The growth and inflation prospects for 2025 show a complex picture globally, in the euro area and in Hungary

This is shaped by geopolitical tensions, trade wars and monetary policy challenges. According to statistics, the total output of domestic agriculture decreased by 8 percent in 2024. The Hungarian agricultural credit market showed a mixed picture in 2024, with the loan portfolio of agricultural cooperatives decreasing due to the decline in investment loans and long-term working capital loans, but the food industry closed with an increase of 6 billion forints. Up to 2,900 billion forints may be allocated for rural development purposes by 2027, depending on the exchange rate, as part of the Common Agricultural Policy (CAP) Strategic Plan.

The stakes are therefore huge – and timing is key

“The government has designed the framework of the agricultural support system in such a way that the exceptionally high 80 percent co-financing that comes with EU funds provides a real opportunity for all farmers. However, the availability of funds alone is not enough; it is also important that they reach the beneficiaries quickly, efficiently, with the least possible administrative burden and without undue control burden. The accelerated investment decision-making and agricultural payments this year also aim to increase the productivity and competitiveness of Hungarian agriculture, further strengthening the role of farmers in the Hungarian economy and in preserving rural values,” said József Viski, State Secretary for Agricultural and Rural Development Support at the Ministry of Agriculture, and Government Commissioner responsible for accelerating the payment of agricultural support. “The support of the Agricultural Business Credit Guarantee Foundation (AVHGA) means stability and predictability for all agricultural businesses and lending banks this year as well. Financing for farmers who are in a difficult situation due to the foot-and-mouth disease epidemic, frost and drought damage or Ukrainian grain must be ensured in the same way as for those who want to implement historic-scale developments within the framework of the CAP Strategic Plan,” emphasized András Herczegh, Managing Director of the Agricultural Business Credit Guarantee Foundation (AVHGA).

The development of the countryside and the food industry is closely related to infrastructure, innovation and the issue of generational change

The resources now available open up new opportunities in these areas as well. “The future of the sector lies in the spread of the farm-to-table approach. To do this, we must primarily increase efficiency and thus the competitiveness of agriculture and the food industry. All this can be achieved through technological developments, generational change and the development of the infrastructure of small settlements,” added László Vulcz, Managing Director of OTP Hungaro-Projekt Kft.

In the 2023–2027 cycle, supported projects will receive non-refundable support of up to 50 percent of eligible expenses

An important novelty, however, is that additional support of 10 percent for interest subsidies and 5 percent for guarantee fee support can also be used in connection with investment loans that complement these. This has never been the case before, and now an effective interest rate lower than the interest rates of the previous Growth Loan Program may even become available. However, it is important that farmers do not rely solely on the arrival of subsidies. Financial instruments are also available in the transitional period to bridge the time and costs required to launch developments. “While in the short term the most pressing task is to draw down funds, in the longer term it is worth keeping the transformation of the sector in mind. The aim of the subsidies is not merely the survival of market players, but to lay the foundation for a more competitive, sustainable agriculture. The over-application rate for applications submitted last year is 3.7 times. These applications envisage complex investments, with the dominance of animal husbandry, food industry and horticulture elements, as well as energy efficiency project parts. Based on our calculations, if these are implemented, it will not only have a positive impact on energy consumption, but will also increase the added value of the companies,” emphasized Szabó István, Head of the Agricultural Sales Directorate of OTP Bank. If an applicant does not win, it is worth considering which support elements and sub-areas of the given project must be implemented in any case. The banking sector provides this opportunity with various financing solutions: either with the Agricultural Széchenyi Investment Loan or with forint market or foreign currency financing. István Szabó added that the players in the sector are uncertain about the foot-and-mouth disease epidemic, and some farmers are hoping for a delay in the support documents. We are constantly monitoring domestic and international events with the experts of OTP Agrár. In the event of a client being affected, we examine possible financing alternatives and strive to help everyone through a possible difficult period in a customized manner, including the possibility of a payment moratorium.

OTP