CRPE Policy Brief No. 20, April 2013
It is estimated that currently, approximately 40% of active farmers in Romania do not have direct access to financial services, and for those who do have, low absorption capacity and the high cost of borrowed capital represent important competitive disadvantages when compared to farmers in other member states. The majority of small producers, whether registered as a legal person or not, do not fit the banks’ attractive client profile: the sectors’ profitability is relatively low, and the entities which apply for credits are predominantly start-ups that do not hold a record of banking operations or material guaranties. The use of land and other agricultural assets as bank guarantees is negatively affected by the increased price volatility.d that currently, approximately 40% of active farmers in Romania do not have direct access to financial services, and for
Until now, the beneficiaries of the National Rural Development Programme in Romania could access the guarantees granted through European funding schemes and by the end of this financial programming period it is possible to benefit from interest subsidies on investment measures.
What happens, however, with farmers that want to bridge the gap and upgrade from subsistence farming to economic sustainability, but do not have the means to apply with projects for the National Rural Development Program and who would need several thousand euro to finance their crops?
A possible solution comes from microfinance, a viable complement for the banking sector to finance agriculture in Romania.
The report is available here.
This report has been published within the pilot-programme ”Rural development through entrepreneurship and association”, an initiative of the Romanian – American Foundation, which, together with experienced organizations in rural economic development and community facilitation, aim to create functional and sustainable agricultural associations in four different regions of Romania.