Riigikogu approves €200 million for rural development fund to help farmers ({{contentCtrl.commentsTotal}})

Toomas Sildam's interview with Minister of Rural Affairs Arvo Aller.
Toomas Sildam's interview with Minister of Rural Affairs Arvo Aller. Source: Anna Aurelia Minev/ERR

The government at a sitting on Thursday approved an increase of the Rural Development Foundation's capital and the conclusion of an administrative agreement for the implementation of crisis aid measures, the total sum of which is approximately €200 million.

Minister of Rural Affairs Arvo Aller (EKRE) said at a press conference on Thursday that the Rural Development Foundation will use three measures to mitigate the liquidity crisis of farmers and rural entrepreneurs both in the present the emergency situation as well as during the exit therefrom.

Aller said that the three measures to be introduced consist of loan guarantees in the total amount of €50 million, loans totaling €100 million and land capital in the amount of €50 million. 

Loan guarantees for bioeconomy and rural economy are planned to total €30 million and farmland sale-leaseback transactions €50 million.

Accessing new loans is complicated and in some cases impossible when businesses' economic activities are impeded by circumstances beyond their control. Insufficient collateral may also prove an obstacle when applying for a new loan. 

In such a situation, guarantees and access to circulating capital are vital for rural entrepreneurs and businesses in the fisheries, agricultural and food sector in order to cover running costs, purchase necessary input material, make additional investments required for business development and prevent difficulties.

The implementation of the measures must be flexible enough to ensure that resources can be redirected between services where appropriate in order to respond to market signals and entrepreneurs' needs. In the present stage of the crisis, predicting demand for each of these measures is not possible. For that reason, it is important that the package should cover all potential financing needs of its target group to ensure their coping in the changed market situation.

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Editor: Helen Wright

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