To help farmers overcome financial difficulties and maintain the economic viability of their farms, the Government approved on Tuesday, 25 August, regulations prepared by the Ministry of Agriculture on granting refinancing loans to primary agricultural producers. The loans will be available to farms that have difficulties meeting their existing credit liabilities. The programme will be implemented by AS “Development Finance Institution Altum” (“Altum”).
A refinancing loan will be available to a farmer engaged in the primary production of agricultural products whose income from primary agricultural production accounted for at least 80% of their total income in the previous completed tax year. The amount of credit liabilities eligible for refinancing will range from EUR 100,000 to EUR 1.5 million.
To obtain a loan, the farmer will have to demonstrate financial difficulties and submit a restructuring plan demonstrating the farm’s ability to restore its economic viability and meet its credit liabilities. When assessing an application, “Altum” will take into account the farm’s potential and sustainability, financial situation, liquidity, collateral structure and other risk factors.
The refinancing loan may not exceed the outstanding amount of the credit liabilities being refinanced. The interest rate on the loan will be up to 12% per annum, the repayment term will be up to 15 years, and repayment of the principal amount may be deferred for up to 18 months. The loan repayment schedule will be tailored to the financial situation of the individual farm.
During the first 30 days after applications open, EUR 5 million of the programme funding will be prioritised for farmers in the municipalities of Augšdaugava, Daugavpils, Krāslava, Preiļi, Līvāni, Rēzekne, Ludza, Balvi and Alūksne. Applications for refinancing loans may be submitted until 31 December 2027, and each farmer may receive such a loan only once.
The programme was developed taking into account proposals from farmers’ non-governmental organisations to improve the “Altum” loan and guarantee programmes. EUR 6 million in public funding has been allocated to the programme from funds repaid under the “Loan Programme for Economic Operators in Agriculture, Rural Development and Fisheries” during the 2021 and 2022 transitional period for the implementation of the Latvian Rural Development Programme 2014–2020. These funds are already at the disposal of “Altum” and can therefore be reused to provide loans. To secure additional funding, “Altum” may raise a State loan or attract up to EUR 15 million in funding from international financial institutions and financial markets.
The draft regulations “Procedures for Granting Loans to Primary Agricultural Producers for the Refinancing of Credit Liabilities” will enter into force on the day following their publication in the official gazette Latvijas Vēstnesis.
