HAMAG-BICRO Financial Instruments for Agriculture Take First Place in the EU

Croatian farmers have been expressing the need for additional financial and investment mechanisms since 2018, which would enable them to grow and develop, as well as provide assistance in difficult circumstances such as the coronavirus crisis. To secure additional investments in working capital, the purchase of livestock, annual crops, and used equipment, many have turned to the Croatian Agency for Small Business, Innovation and Investment (HAMAG-BICRO). HAMAG-BICRO, as the government’s key agency for promoting small and medium-sized enterprises, in collaboration with the Ministry of Agriculture, implements the Rural Development Program under which farmers have access to various loans and credits. Loans and credits for rural development with low-interest rates, which are mostly repaid into the Rural Development Program loan fund and allocated to other recipients, as well as lower fees, longer repayment periods, and greater possibilities for loan/credit repayment deferrals with fewer collateral instruments, are very attractive to farmers.

Additionally, during 2020, two more financial instruments were launched in response to the COVID crisis. Following the successful implementation of financial instruments for rural development in the Republic of Croatia in collaboration with the Ministry of Agriculture, HAMAG-BICRO significantly contributed to Croatia ranking first in the European Union in terms of total allocated financial instruments for agriculture and rural development.

Several Increases in Allocations

After analyzing the results, the European Commission, the Directorate-General for Agriculture and Rural Development, in collaboration with the European Investment Bank (EIB), organized a conference titled ‘Access to Financing for Small Family Farms in the EU’ in Brussels in early May 2022, during which representatives of HAMAG-BICRO presented a successful model for implementing financial instruments in Croatia. The presentation was delivered by Ivan Križanović, Head of the Rural Development Department in the Guarantee Service.

As of May 1, 2022, a total of 1,334 loans for rural development amounting to 393.9 million kuna have been approved. Of the total number of approved loans, 66% relates to the Small Loan for Rural Development, or 875 loans amounting to 325 million kuna, and 23% to the Micro Loan for Rural Development, or 303 loans amounting to 46.2 million kuna. The remaining 12% relates to the Micro Loan for Working Capital for Rural Development, or 156 approved loans amounting to 22.6 million kuna.

More Opportunities for Small Farmers

Due to the significant interest of farmers in loans, the allocation has been increased several times from 2018 to the present, so the total allocation for loans has increased from the initial 134 million kuna to 654 million kuna.

Having worked with farmers for years, HAMAG-BICRO has adapted its programs to their needs. As a result, the Program for Agriculture and Rural Development has been modified several times. For the first time during the coronavirus crisis, a new program, the Micro Loan for Working Capital for Rural Development, was established to facilitate and enable farmers to acquire working capital and production materials with a reduced interest rate of 0.1% – 0.25%.

For the second time, in July 2021, the maximum amount of Small Loans for Investments was increased from the existing 50,000 euros to 100,000 euros, and the previously mandatory economic size criterion, which was 6,000 euros for the fruit, vegetable, and flower sector and 8,000 euros for other sectors, was removed from the program. This allowed even the smallest farmers to apply for Micro and Small Loans for Rural Development.