ew financing opportunities serve agricultural enterprises

(Photo: AM/Csaba Pelsőczy)

István Nagy emphasized that the government will also provide the resources needed to improve the standard of living in rural areas and the development of agricultural enterprises this year. Hungarian agriculture is transforming, digitalization has become more valuable, and new opportunities are opening up for producers. New challenges require adaptation, as there is no success without a change in attitude, but the recent period has proven that Hungarian agriculture has the ability to change and is open to innovations – he said. The Minister considered it a sign of confidence that the support needs of 7 applications concerning food and feed processing, animal husbandry and horticulture in the recent period were four to five times higher. Farmers see serious opportunities in agriculture and want to invest even in the midst of challenges – he added. The support system is working well, out of the approximately 2,900 billion forints of agricultural and rural development support in the current financing cycle, 30 calls for proposals last year alone helped the competitiveness of agriculture and forestry. Numerous calls for proposals will also be published in 2025, which support, among other things, adaptation to climate change and developments that create high added value. Even the smallest farms can expect special assistance in the coming months, they can apply with development plans supporting animal husbandry, horticulture and the processing of agricultural products – he added.

The minister announced that the Ministry of Agriculture will also cover the costs of borrowing in the form of a non-refundable grant

In addition, interest costs will be reimbursed for up to 10 percent of the eligible costs of the projects for several years, as well as the annual guarantee fees of the Agricultural Business Credit Guarantee Foundation (AVHGA). This will make it easier and more convenient for farmers to access external resources. Successful applicants can apply for interest and guarantee fee support in a simplified procedure, which will be reimbursed by the Hungarian State Treasury afterwards. When submitting the final payment, it will also be possible to settle the support related to interest costs and guarantee fees for the mandatory maintenance period in advance. István Nagy justified the new support options by saying that the ratio of successful investments must be increased in the current support cycle. The Minister is confident that the developments that receive assistance will make production safer, increase profitability, reduce agricultural labor demand and greenhouse gas emissions, contribute to a more efficient use of resources and the success of young farmers.

András Herczegh, Managing Director of AVHGA, explained that bank resources can double the resources available for developments

This year, with a grant of 1,500 billion forints, almost 3,000 billion forints can help farmers’ investments. Based on this, he sees that the resources for developments can be secured, but he called the difficulties affecting agriculture a significant challenge, which also affect bank risk management. The interest rate environment has also changed in the recent period, although the resource needs of agriculture are significant even without the extraordinary difficulties, much greater than those of other sectors – he emphasized. According to the head of the foundation, the implementation of competitiveness and sustainability projects requires cooperation between the support system and the banking system, coordination of their operations, and he expects interest and guarantee fee subsidies to significantly increase the proportion of successfully implemented projects. He also assessed as an important innovation that applicants will be able to request a 25 percent support advance from the Hungarian State Treasury without a bank guarantee. András Herczegh announced that over the past 3 years, AVHGA has increased the amount of loans covered by its guarantee from 500 billion forints to 625 billion forints, and it guarantees 250-300 billion forints in new loans annually. In Hungary, the loan portfolio of agriculture is 1,070 billion forints, and that of the food industry is almost 720 billion forints, he added. The guarantee is a guarantee for the bank, which can thus grant more loans, giving it greater room for maneuver, and it is also a guarantee for the applicant, which can therefore undertake more development and increase its burden-bearing capacity. AVHGA is also an important player because it can offset external difficulties and the cyclical nature of financing periods, and helps as many agricultural enterprises as possible to make investments, he added.

MTI