To improve access to finance for farmers, encourage the establishment of new farms, the reorientation and diversification of agricultural activities, as well as the production of new products through the processing of agricultural products, the Government approved on Tuesday, 25 August, regulations prepared by the Ministry of Agriculture introducing a new financial instrument – loans with a capital rebate. EUR 19 million from the European Agricultural Fund for Rural Development (EAFRD) under Latvia’s CAP Strategic Plan 2023–2027 has been allocated for the implementation of the programme.
The new programme provides for the possibility of writing off part of the principal amount of a loan issued by AS “Development Finance Institution Altum” (“Altum”) after the investment has been completed and the specified economic activity results have been achieved. The capital rebate may amount to up to 50% of the principal amount of the loan, but not more than EUR 100,000. The beneficiary’s total net turnover in the previous completed tax year may not exceed EUR 250,000, excluding State and EU support received.
For starting agricultural activities, the minimum loan amount will be EUR 20,000, while for reorientation, diversification and the production of new products, it will be EUR 50,000. The loan amount may be up to EUR 250,000.
Loans with a capital rebate will be available for three areas of development: young farmers starting agricultural activities; farmers reorienting or diversifying their agricultural activities; and the production of new products through the processing of agricultural products. Loans for reorientation or diversification will be available for fruit growing and vegetable growing, including greenhouse production, cattle, sheep and goat farming, pig farming, poultry farming, beekeeping and rabbit farming. Loans may be used for investments, including the purchase of animals, annual and perennial crops, machinery and equipment, as well as the purchase or construction of buildings and structures. Land purchases will also be eligible – young farmers will not be subject to the 10% limitation, while other applicants may use up to 10% of the total loan amount for the purchase of land.
The capital rebate will be applied after the investment has been fully implemented and the specified results have been achieved. To qualify for the capital rebate, in projects involving the start-up, reorientation or diversification of agricultural activities, income from the production of the relevant products, and in processing projects, income from the production of the new food product, must amount to at least 20% of the loan amount. In the case of perennial crops and beef cattle farming, this requirement may be met by achieving a standard output for the relevant sector amounting to at least 20% of the loan amount.
Loans will be provided and the programme administered by “Altum”, while the Rural Support Service (RSS) will assess compliance with the conditions for applying the capital rebate. Loans will be available throughout Latvia, except in state cities. The loan term will be up to 10 years for the purchase of assets and up to 15 years for the purchase of real estate, construction, reconstruction and the installation of engineering networks.
The draft regulations “Procedures for Granting Loans with a Capital Rebate to Agricultural and Other Economic Operators in Rural Areas” will enter into force on the day following their publication in the official gazette Latvijas Vēstnesis.
