The market of financing for such projects will amount to EUR3.5 billion to EUR4 billion over the next six years, or EUR500 million loans every year, split between banks and NBFIs.
“We want to create competition between banks and NBFIs. So far, under the old program, only banks have been able to grant loans for such projects,” said George Turtoi, the state secretary in charge of EU funds at the Agriculture Ministry.
The inclusion of NBFIs in this market comes at a time when tax evasion in the sector has made banks wary and one of the most frequent reasons for the cancellation of EU funded agricultural investment projects in the past has been the inability of farmers to come up with their share of the funding via bank loans.
The agricultural sector accounted for 3.8% of the loans granted by banks in the first seven months of this year and for 15% of the loans granted by NBFIs. The bank loan volume directed to agricultural investments stands at EUR2.5 billion, while the loans taken from NBFIs stand at EUR1 billion.
Another reason for the entry of NBFIs on this market is that the entire EU fund program was devised to mainly help the small farmers looking to take the step from subsistence and semi-subsistence farming to commercial farming.
Romanian authorities hope the EUR9 billion available for agriculture will boost the yield so Romania will no longer be one of the laggards in this department in the EU.
“The goal is to have a comparable yield to the other countries in the EU. You cannot do this with farms of up to 5 hectares, the costs are huge,” George Turtoi said.
(English version by Loredana Fratila-Cristescu)