Cash Instead of Selling Grain at a Loss: How Much Farmers Will Be Able to Borrow Against Their Harvest
12 August 07:46
Ukrainian agricultural producers have seen their interest rates on working capital loans reduced to 10% and have been allowed to use more borrowed funds for seeds, fuel, fertilizers, and rent. At the same time, grain will be valued significantly higher as collateral. Taras Vysotsky, Minister of Agrarian Policy and Food, announced the new support mechanisms, according to "Komersant Ukrainian"
Who Is Eligible for 10% Loans
The 10% annual interest rate has been set for agricultural producers who take out loans to finance working capital.
This refers to funds needed for the farm’s day-to-day operations, specifically for:
- purchasing seeds;
- purchasing fertilizers and plant protection products;
- fuel and lubricants;
- land rent;
- covering other expenses related to the planting and harvesting seasons.
Previously, the interest rate on such loans was 15% per annum. Now, agricultural producers will pay 10%, and the state will compensate the bank for the difference between the preferential and commercial rates.
“For the fall planting season, the maximum loan amount is 90 million UAH—this is sufficient to finance the production cycle on an area of up to 3,000 hectares. In November, the government plans to consider increasing the limit to 150 million hryvnias in preparation for the spring planting season. The total amount of state guarantees for these loans is expected to reach 80 billion hryvnias. “The agricultural sector needs 40 billion hryvnias per month for the planting season. Therefore, the government is already providing the necessary resources for the next two months,” emphasized Taras Vysotsky.
Restrictions on working capital have been lifted
Another important change concerns the use of borrowed funds.
Previously, under the program’s priority areas, no more than 20% of the loan amount could be allocated to working capital. This restriction has been lifted for agricultural producers.
Now they will be able to use the majority of the loan for the direct needs of agricultural production.
Is it already possible to receive 150 million UAH?
Currently, the maximum loan amount for the fall planting season is 90 million UAH per farm.
According to estimates by the Ministry of Agrarian Policy, this funding should be sufficient to cover the production cycle on an area of up to 3,000 hectares.
The increase in the limit to 150 million UAH has not yet been approved. The government plans to consider this possibility in November 2026—in preparation for farmers’ spring planting campaign in 2027.
The agricultural sector’s total need for working capital financing for the fall period is estimated at approximately 200 billion hryvnia. An additional 300–350 billion hryvnia will be needed for the spring of 2027.
According to the Minister, the idea behind the loans is to remove chaotic grain supply from the market, which drives down prices. Instead of selling grain at low prices, farmers now have the opportunity to obtain loans to address their immediate needs. This will help them weather the period of sharp price drops and reduce speculative factors.
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How Much Money Will Be Provided Against Grain Collateral
Another important measure is the National Bank of Ukraine’s (NBU) increase in the collateral ratio for grain from 0.4 to 0.75. This means that farmers will be able to secure a larger amount of financing using grain as collateral. In other words, if in June a farmer could take out a loan of 4,000 UAH using a metric ton of wheat—which was priced at 10,000 UAH—as collateral, then in August, when grain prices are 7,000–6,000 UAH, they will be able to obtain an even larger loan: 5,000–4,500 UAH.
This mechanism is intended to help producers avoid selling their grain immediately after harvest at rock-bottom prices. Instead, farmers gain the opportunity to secure the necessary funds, store their produce, and sell it when market conditions are more favorable. At the same time, this reduces the excess supply of grain on the domestic market.
What Has Changed with Export Prices
The government has also adjusted the minimum export prices for agricultural products to account for rising logistics costs.
This decision was made at the suggestion of agricultural associations—producers—taking into account changes in logistics and actual market prices.
In particular, when exporting via alternative routes, a significant portion of the product’s cost is made up of shipping costs to European ports. For example, logistics to Constanta, Romania, can amount to about $170 per metric ton.
The applied coefficient of 0.714 accounts for a possible sharp drop in prices on foreign markets. The calculation is based on the maximum monthly price drop during the most challenging period of 2022—28.6%. At the same time, the actual decline, according to official statistics on actual transactions, currently stands at about 19%.
Taras Vysotsky drew particular attention to alternative export routes. According to the Ministry of Agrarian Policy’s assessment, these routes could potentially facilitate the export of up to 3 million metric tons of Ukrainian agricultural products per year.
The Minister noted, however, that Ukrainian agricultural products passing through Poland and other EU countries are intended for transit to third countries. This includes, in particular, shipments to Algeria, Indonesia, and South Korea. Such transit also provides additional capacity utilization for the port infrastructure of the Baltic states.
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