19:02 03.03.2023

Farmers ask authorities to extend 5-7-9 lending program for spring sowing season

5 min read

Major agricultural associations of Ukraine are asking to extend the government Affordable Loans 5-7-9 program and increase the lending threshold from UAH 90 million to UAH 180 million per farm.

The appeal to the Prime Minister of Ukraine Denys Shmyhal and Minister of Finance Serhiy Marchenko was voiced in the press center of Interfax-Ukraine by Director of the All-Ukrainian National Agrarian Forum Maria Didukh, Deputy Head of the Ukrainian Agrarian Council (UAC) Denys Marchuk, Director General of the Rodyna-2007 farm Valeriy Martyshko, and Head and founder of Andriyivka private enterprise Mykola Pyvovar.

According to farmers, on the eve of the spring sowing season in Ukraine, a situation has developed that is even more critical for the agricultural sector than at the beginning of full-scale Russian aggression. it is explained by the fact that with the outbreak of the war in 2022, farmers used their own accumulated resources and used borrowed funds with the help of the 5-7-9 government program of concessional lending, which was used by about 44,000 agricultural producers over the past year. However, this program has not been extended for 2023, despite the fact that farmers do not have the funds to purchase inventory items for the upcoming sowing season.

"As we approach the spring season, we see that the sown areas will be reduced by at least 25% due to the occupation and mining of the territory, and about 7 million hectares will not be used for growing crops. There is a risk that farmers will not sow crops on about 5 million hectares if they have no money for this. These are catastrophic figures. In conditions of insufficient sowing, Ukraine will not deliver food to the world and receive less foreign exchange earnings. Even if there is concessional lending, Ukraine would harvest no more than 35-36 million tonnes of grain in 2023, and without financing, this forecast should be further reduced," Marchuk said.

According to him, last year Ukrainian agribusiness was able to harvest more than 70 million tonnes of crops, including 50 million tonnes of grain crops, which made it possible to attract about $22 billion and support the economy of the warring country, while agricultural products accounted for 53% of total exports from Ukraine.

In addition, the position of farmers before the sowing season this year is worse than last year, because before the war the farmers managed to buy fertilizers, crop protection agents, fuel, and seeds, which they did not manage to do this year. Also, after February 24, 2022, the product supply chains were destroyed, ports were blocked, and the sea export of Ukrainian agricultural products was completely stopped for some time. The situation did not fundamentally improve even with the launch of the grain corridor, Solidarity Lanes, and the creation of alternative routes for the export of Ukrainian grain. These measures did not help the agricultural producer to fully sell their products and get enough financial resources.

"Agrarians faced the fact that logistics "eats" 60-70% of the price of products, they had to sell products produced in the previous year at a loss. On the eve of the sowing season in 2022, farmers attracted UAH 38.5 billion in loans in two and a half months thanks to the program on 5-7-9 concessional lending. Today, those who used these loans have two big problems. The first is that it is necessary to sow, and the second is that these loans must be paid back if the government does not prolong the program," Didukh said at the press conference.

"We understand that the state currently has no funds, all financial resources go to the army. But you need to understand how important the agricultural sector is for the Ukrainian economy. Without exports, there will be no foreign exchange earnings, we will not be able to ensure food security, and without concessional lending, there is a risk that many producers of agricultural products will cease their economic activities," she added.

According to Martyshko, who participated in the discussion, last year, the availability of loans made it possible to withhold grain in the granaries for a more profitable sale and, thanks to this, get at least zero profitability, which in 2023 will be more difficult to do from for lack of working capital.

"This year, the loan funds will be fully used to support the sowing season because there are no other financial sources for its implementation. The next 2024 will be even more difficult. For the last 12 years, my company has worked in such a way that it did not need to raise funds, but we won't survive in the war without financial support," he said.

An even more difficult situation with the sowing season for farmers in the territories de-occupied last year was announced by Pyvovar.

"In Kharkiv region, many agrarians have lost their enterprises. Those who have money left for cultivating the land cannot work because all the fields are mined. We are grateful for the 5-7-9 program, which made it possible to work last year. This year, we ask you to extend it so that the financial threshold is raised and those enterprises that are not able to repay last year's loans could increase their financial portfolio and work further," he said.

Thus, the participants of the press conference said that in 2022 the state made concessions and increased the possibility of lending to the agribusiness under the 5-7-9 program for one legal entity from UAH 60 million to UAH 90 million, but due to inflation, such volumes are no longer enough in 2023. According to the participants of the meeting, to close the problematic issues of the 2023 sowing season, it is necessary to extend the said government program and double the credit limit for a legal entity from UAH 90 million to UAH 180 million.