Small and medium-sized farmers are showing increasing interest in bank loans for purchasing agricultural land, according to P. Huzyr.

Small and medium agricultural producers are showing an increasing interest in financing options for purchasing agricultural land. This was stated by Pavlo Huzyr, the head of alternative sales channels at "AgroFabrika," part of OTP Bank, during the conference titled "A Year of Business Participation in the Land Market: What Has Changed?" organized by the Food and Land Use Research Center at the Kyiv School of Economics (KSE Agrocenter).

https://focus.ua/ukraine/691906-mali-ta-seredni-agrariji-naroshchuyut-interes-do-bankivskogo-kredituvannya-dlya-kupivli-s-g-zemli-p-guzir2025-02-05 07:54:01

"At the end of November 2024, OTP BANK executed its first loan agreement for the purchase of 58 hectares of agricultural land by an agricultural enterprise from the Vinnytsia region. Currently, we have 12 agreements in progress. Two are already in the final stages of signing. One of them is for the purchase of agricultural land in the Odesa region for 7 million UAH. I believe that all 12 agreements will be finalized in the first quarter of this year. We are witnessing a surge of interest among agricultural enterprises in purchasing land on credit. Primarily, these are clients representing medium-sized agribusinesses that manage over 1,000 hectares of land, although there are also inquiries from microbusinesses. To obtain a loan from OTP BANK, agricultural enterprises must cultivate more than 200 hectares of land, have been operating for over 3 seasons, maintain official profitable activities, and possess a positive credit history," he stated.

Pavlo Huzyr noted that purchasing land will encourage agricultural producers to treat it more sustainably – adhering to crop rotation, cultivating cover crops, and will allow farmers to invest in it with greater confidence, particularly in establishing orchards, developing organic production, and investing in irrigation systems.

According to the expert, buying agricultural land on credit is more advantageous compared to leasing. "According to our calculations, if a farmer purchases land on credit for 7 years, he will pay the same amount for the principal and interest as he would for leasing shares. However, in the first case, he will already be the owner of this land, which will make his business more resilient and understandable to the Bank. Furthermore, the price of land and its rent will only increase, so in the long run, the agricultural producer will reduce the cost of growing agricultural products and gain investment income," explained Pavlo Huzyr.

OTP BANK offers clients a credit program to acquire funds for purchasing agricultural land:

financing is provided for a term of up to 7 years, with a down payment starting from 20%;
there is an option to utilize the state program "Affordable Loans 5-7-9%" with a 7% interest rate, which can be reduced to 5% per annum;
financing can be obtained under the Risk Sharing Program, which OTP BANK implements in collaboration with the European Bank for Reconstruction and Development.

For more details about the loan program for purchasing agricultural land, visit: https://www.otpbank.com.ua/agribusiness/agribusiness-products/land-loan/