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Mariana Nazar
Postgraduate student of the department of management
named after E. Khraplyvyy Lviv National Agricultural University mbilozir@mail.ru
Directions of improvement of agricultural enterprises lending system in Ukraine
Abstract: In the article problems of farm loans are considered, as well as tendencies of bank lending are analyzed. An improvement of the possible directions of agricultural enterprises crediting are drawn. Keywords: credit, bank lending, agricultural enterprise.
Ukraine has long been considered a predominantly agricultural country, therefore farm crediting objectively requires special government regulation and financial support. The functioning and development of the agricultural sector is largely dependent on its credit support, because lending is a source that stimulates its development. Agriculture, by its nature, require particular consideration of the objective requirements of the industry and a proper organization of its crediting services. Current trends indicate a problem in providing loans for agricultural enterprises. On the one hand, banks are not able to cover the needs of enterprises in crediting to full extend, on the other hand - these businesses are classified as enterprises of high risk, hence it increases interest rates and create difficulties of opportunities for credit usage.
Given problem was investigated by many scientists, including O.Hudz, N. Demyanenko, P.Layko, P. Sabluk and many others. However, improvement of crediting system still does not play a proper role in agricultural production financing, that is why topical research issues of development and development of scientific suggestions to improve the provision of farm credit resources remain crucial.
There is a number of internal and external factors affecting the efficiency of agricultural enterprises, and thus - their ability to repay loans. The internal factors in-
clude the following: lack of real enterprise restructuring; low level of enterprise management; lack of marketing strategies; focus on production, not profit; lack of motivation to improve efficiency of employees work in the company. The external factors include: the absence of a competitive environment in the acquisition and sales resources; moratorium on sale of agricultural land; high interest rates on credit; adverse conditions of agricultural exports and imports of resources for the countryside; interference of local authorities into industrial and financial activities of enterprises. In this respect, studying the formation and development of both traditional and alternative forms and mechanisms of financing may be interesting.
As far as volume of bank lending industry is concerned, according to the National Bank of Ukraine for 2010-2015. Farms had received 244,470 mln. UAH. commercial bank loans, including 109,337 mln. UAH. (44.7%), short-term 109 172 mln. USD. (44.6%) of medium and only 25 961 million. UAH. (10.7%) of long-term loans. It should be noted that the provision of agricultural enterprises short-term loans is much higher than the medium and long term. Due to the short-term credit, only part of the ongoing costs of technological operations can be financed, mainly soil preparation, planting spring and winter crops, purchase seeds and
Directions of improvement of agricultural enterprises lending system in Ukraine
planting material, fertilizers, plant protection, fuels and lubricants [2].
However, financing costs to upgrade and purchase of agricultural machinery, construction of warehouses, silos, livestock farms, which requires long-term lending cause some dificulties. In addition, long-term loans require financing of new production activities, investment projects, particularly in horticulture, viticulture, agricultural products processing.
Despite the positive trends, providing farm with loans given by commercial banks do not meet the needs of economic growth sector.
Due to this, usage of new instruments and state measures to stimulate lending activity of commercial banks in agriculture is urgent. Unfortunately, banks often seek not only to cover their risks in agricultural lending rates, but also set it at a higher level than companies in other sectors. The credit rate for farms in 2010 was 26%, and generally in the economy - 25%, in 2011 - 26.5% and 25.4%, respectively, in 2015 - 28% and 22% respectively. That is, the agricultural sector is in jammed state. During the period 2010-2015, the credit funds benefited 13,198 farm. It is believed that village credit unions may solve this problem, their revival in Ukraine last for over 20 years. In fact, according to reports submitted by credit unions (early 2016) The National Commission of State
Regulation of Financial Services Markets in Ukraine there are over 577 credit unions, and these organizations are successfully developing. They include nearly 722,000 citizens, possess total assets of 2,079,200,000. UAH., about 85.7% of which are loans [1].
Improvement of crediting agricultural enterprises in Ukraine should be aimed at implementation of following events:
• encouraging banks and nonbank financial institutions (including credit unions, credit cooperatives system);
• concentration and increasing budgetary and non-budgetary financial support of agriculture;
• increasing of financing and crediting that will allow the state to financially support agricultural producers;
• reduction of interest rate for loans to agricultural enterprises that will lead to attracting of entrepreneurs;
• Increasing of the volume of long-term loans in agriculture;
• usage of leasing as a flexible technology and at the same time constructive way of doing business .
Therefore, reduction of capital costs, the development of new credit instruments and services specific to agricultural production, improving existing approaches and risk management will contribute to the further development of bank lending to agricultural enterprises.
References:
1. National bank of Ukraine official web-site: http://www.bank.gov.ua/control/uk/index
2. Ministry of agrarian policy and food of Ukraine official web-site: http://minagro.gov.ua
