IKAR in Mass and Industry Media

Russia Increases Crop-Planting Loan Subsidies After Rates Double

Bloomberg

Jan 19, 2015 Bloomberg -- Russia will increase agricultural subsidies as farmers in the world’s fourth-biggest shipper of wheat face borrowing costs that almost doubled from a year ago.

Farmers, due to start sowing fields for the 2015-2016 season in March, will get a government rebate equivalent to 15 percentage points on rates charged by banks, Deputy Prime Minister Arkady Dvorkovich said Monday. Russian Agricultural Bank and Sberbank plan to levy 25 percent to 27 percent on loans to buy fuel, seeds and fertilizers, Dvorkovich said at the lower house of parliament in Moscow.

“This comes as some sort of relief,” Dmitry Rylko, director of Moscow-based market researcher the Institute for Agricultural Market Studies, or Ikar, said by phone. “Farmers had been hoping for a measure like this.”

A year ago, banks charged 14 percent to 15 percent for similar loans, according to Vyacheslav Telegin, chairman of the Moscow-based Association of Russian Farms and Farm Cooperatives. Then, government subsidies covered about 5.5 percentage points of the rates, he said.

Loan costs leapt in Russia as the central bank raised its benchmark rate to 17 percent from 10.5 percent last month to reverse the ruble’s slide to record lows. The country later introduced taxes on wheat exports in an attempt to reduce food prices as the currency’s collapse made it attractive for farmers to sell grain abroad.

20.01.15

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