The government actively supports the agricultural sector, but without a loan to develop agribusiness is almost impossible. Where and how profitable to take loans to agricultural producers in Kazakhstan?
The area of land with crops is constantly growing, farmers are actively increasing the number of livestock. Many farmers in Kazakhstan hope for state support. It regularly assists in land allocation, and allocates various grants. But without credit from agricultural development opportunities are limited, and they often have questions and problems.
What financial challenges do farmers?
Farmers and other participants in the agricultural sector are set to income generation and business development. But agriculture faces serious challenges. For many of them the necessary finances, and a lot of passes “КазахЗерно.kz”.
Financial difficulties of farmers related to the following issues:
- The purchase of equipment. Treatment of land and equipment, increasing the area of land simply cannot be processed in a timely manner. Technics of the European level allows you to increase the results per hectare of land due to the reduction of losses, for example, when cleaning the grain. Livestock also needed if you plan to increase the number of livestock.
- Purchase of spare parts. Break any technique, especially the terrible damage during the sowing and harvesting campaigns. A specific set of components farmers have to have in stock, sometimes their delivery takes too much time. Problems to buy spare parts there, if you have the finances for this purpose.
- Buying fuel. The demand for them increases during sowing and harvesting campaigns.
- The purchase of farm animals. Livestock development is mainly due to the increase of the population. But each animal also costs money.
- Purchase of seeds. Purchasing seeds is highly subsidized by the state. For example, in 2019, the growers received seeds according to the norms without charge, and their cost was offset by government subsidies. But often they have to buy.
- Farmers, like any other business, you have to think about the salaries of employees. These costs also account for a large share of the budget as individual farmers and entire holdings.
Troubled times for farms
It is believed that the problems farmers experienced only during the sowing and harvesting campaigns. This is partly true, but only in respect of the growers. Universal or livestock farmers are less susceptible to seasonality. They can develop year-round and, therefore, always feel the need to access the credit money.
Who gives loans to farmers
KazAgro and its “daughters” actively have been funding the second tier banks for crediting of agricultural producers. They prefer to work with large projects. For example, in mid-2018 SB JSC “Sberbank”, with the funds from JSC “agrarian credit Corporation”, provided a credit line in the amount of 5.1 billion tenge LLP “Green Capital Kazakhstan”. Funds went to the launch of the greenhouse complex with an area of 6.7 hectares. It was purchased from a Dutch company KUBO Greenhouse Projects.
Banks are in some cases willing to consider small requests of farmers, despite support from the state. This is due to the business model and the risk calculation feature of this category of credit institutions. But through second-tier banks receive annually support more than 6,000 farmers from across the country.
If you need a very small loan to farmers and small businesses before coaching in a microfinance institution. They actively occupy a niche that banks do not seek.
Specifics of lending through MFIs:
- The possibility of getting to borrow money without collateral. Banks are not willing to work with farmers due to insufficient collateral. The business model of MFIs allows higher risk, and they lend to farmers even in the absence of collateral.
- The availability of services in almost all regions. MFIs work with clients even in areas where banks are scarce or they do not exist at all.
- Online check-in. Individuals can choose the company through the online directory zaymonline.kz to apply for the website of the MFI, to obtain approval and sign a contract via SMS. Business representatives for the contract will need an electronic signature.
- The large size of the loan. Often MFIs are associated with small loans “to pay”, but businesses can obtain loans worth up to 20.2 million tenge. The lending terms are determined by the specific company itself, but rate should not exceed 56% per annum.
Special loan programs
The government actively subsidizes loans to farmers either through banks and MFIs. In microfinance institutions can obtain loans under the guarantee of KazAgro at 6% per annum with term up to 7 years. Specialized loan programs that work for breeders, poultry farmers, crop growers.