ANOTHER TOOL TO MAKE IT EASIER FOR THE FOOD SECTOR TO ACCESS CREDIT

For the first time in Hungary, a new, preferential guarantee is available for agriculture, the food industry, food retail and wholesale trade, as well as agricultural-related enterprises and primary producers, which can be applied for from 1 July 2022 until the end of 2022 within the framework of Section II of the Crisis Agricultural Guarantee Program of the Rural Credit Guarantee Foundation (AVHGA).

The new item replaces the temporary support item introduced in connection with COVID-19, the main beneficiaries of which were also rural and agribusinesses. During the coronavirus pandemic, AVHGA guaranteed 783 billion new and prolonged loans.

On 17 June 2022, the European Commission approved the new loan guarantee scheme under case number SA.102986. Through the new Temporary Crisis Framework for State aid , the Commission will not provide additional resources, but will allow AVHGA’s guarantee at a reduced rate to be provided on a wider scale, thereby increasing the financing possibilities. In doing so, the Foundation helps the food sector, which is in a difficult situation due to the geopolitical crisis caused by the Russian-Ukrainian conflict and the related sanctions. The fee for the agricultural guarantee under this title is expected to be only 0.25% of the loan amount, which will allow the Foundation to take over 90% of the banks’ risks.

Maintaining a secure food supply is a key issue. The Russian-Ukrainian war caused extreme price increases in the grain, oil, feed, energy and fertilizer markets worldwide. Therefore, everything must be seized in order to cushion the effects and negative consequences of the crisis. The liquidity of enterprises must be maintained and investments must also be made in order to strengthen their competitiveness. The maintenance of the possibility of borrowing is particularly facilitated by loans where the guarantee is secured and interest and guarantee premiums are subsidised. For the development of agriculture and the entire food sector, AVHGA continues to provide guarantees in a stable, increasingly favourable manner, for which the Ministry of Agriculture also provides fee support. Eligible undertakings can claim the preferential guarantee through their creditor bank.

(Ministry of Agriculture, Press Office)