A heavy blow to the peasants. “That change hasn't hit them yet.”

– Banks have different approaches based on the new regulations for providing services to farmers. Some have completely stopped accepting loan applications from farmers, others are supporting them to a limited extent – says Bartosz Kublik, Vice President of the Association of Polish Banks (ZBP) in an interview with money.pl.

He explains it The banking sector fears the legal risk after the experience with Swiss franc and zloty borrowers. Banks also assume that law firms want to make money on the not-so-clear rules of financing farmers/entrepreneurs who try to undermine loan agreements.

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Mainly the so-called commercial farmers became problematic – that is, those who produce on a large scale and supply agricultural products to Polish processors. This is a huge branch of the economy. Exports of this sector exceeded 40 billion euros in 2022, and reached an even higher value in 2023. This makes Poland's agricultural sector one of the largest in the EU.

According to the data of the Central Statistical Service, there are about 1.3 million farms in Poland, of which 250-300 thousand. There are manufacturers. These are commercial farms that have been investing in their development for the past 20 years. Loans for these farms typically amount to millions of zlotys and are not subject to the Consumer Credit Act, which applies to simple, standardized products up to a maximum of PLN 255,550 or its equivalent in a currency other than Polish.

Financing of large farms operating Polish dairies, processing or meat factories is classified as loans for entrepreneurs, including: working capital, investment and leasing. But – as we wrote above – the Lombard Act changed the legal situation, where, regardless of the scale of the activity, the farmer/entrepreneur is the consumer, and this is the essence of the problem.

I think that this change in the law has not reached the farmers yet. All the actions that were supposed to protect the farmers turned against us. Farmers will not take this loan if it is much more expensive and everyone loses. Instead of selling the crop gradually and rationally, they will get rid of everything at once, because they will have to buy fertilizer and pay taxes. Until now, they have been supported by working capital loans. Without loans, there will be no investment, because a small percentage of farmers buy equipment or land or build a building with their own money.pl Juliusz Młodecki, President of the National Association of Rapeseed and Protein Crops Producers.

In Poland, 60 percent of agricultural loans are provided by cooperative banks, and the remaining 40 percent by commercial banks, of which BNP Paribas is the largest lender.

The biggest problem for banks is not the non-interest expense limit (along with interest, the second source of banks' income, including margin), which is specified in the Consumer Credit Act, but differences in the creditworthiness assessment procedure or credit risk assessment – the margin is calculated differently in consumer financing and differently in the corporate office.

– The cost of risk for farmers is lower than for traditional entrepreneurs due to good profitability. Every year, several dozen farmers with loans of 250-300 thousand have serious problems with repayment. If the previous legal status is not restored, the loan for farmers will become more expensive because the consumer is better protected by the law and therefore the risk for the bank is greater. This is an economic aberration – thunders the vice-president of the Association of Polish Banks.

He explains that the inclusion of farmers in the Consumer Credit Act regime is a barrier to preferential lending, ie supported by government subsidies and guarantees. The problem also applies to a popular product among farmers, which is a leasing loan. Farmers usually use it to finance the purchase of agricultural machinery.

Moreover, lumping agricultural loans together with consumer loans – according to Kublik – destroys the well-functioning system of agricultural financing in Poland. Our interlocutor believes that this is also a blow to cooperative banking, which has strong ownership ties with farmers, many of whom are also customers and shareholders of these banks.

– The changes in the law were presented in a populist manner: from now on we treat farmers as consumers and they are better protected. Just protecting more money won't be desirable to farmers. Banks, eager to sell as many loans as possible, should have responded early. They should also contact agricultural organizations more often, looking for a bucket of water when it's already on fire, says Juliusz Mlodecki.

Before that, changes were made to the law, so that, for example, a herd cannot be considered as collateral for a loan, and this was also sold as propaganda: bad banks will no longer take over the estate. Only later did it become clear that some farmers without creditworthiness could no longer get a loan from the bank.

– We cannot allow farmers to be left without financing or with difficult access to money, given the harvest, complex geopolitics and inflation. We are open to negotiations with the government, says Kublik from the representative of the Polish Banks Association.

Bankers pointed out the problem during the legislative work on the Lombard Act under the previous government, but they were not listened to, and this idea has legal force today.

The protracted formation of the new government meant that talks with the current government of the agriculture and finance ministries were only possible until Christmas Eve. On December 21, the Agribusiness Financing Group met at the Association of Polish Banks (It includes representatives of all banks involved in financing farmers and representatives of the Association of Polish Banks) with Adam Novak, then candidate for Deputy Minister of Agriculture. Although the agenda of the meeting was extensive, the discussion focused on one topic: the problem of financing farmers.

– Apparently, the Ministry of Agriculture understands this These regulations were excessive, because they paralyze lending to farmers. We remind you that we are in the pre-harvest period, and soon there will be needs for financing and investments in the working capital of agricultural production materials – emphasizes Kublik.

According to him, before Christmas, the Deputy Minister of Agriculture sent a letter to the Ministry of Finance and requested to change these regulations.

We asked the Ministry of Agriculture and Finance for a comment. In the latter's response, we read that the Ministry of Finance received letters from the Minister of Agriculture and Rural Affairs, as well as from market representatives, indicating the need to amend the Act of April 14, 2023 on consumer pawn loans. Financing of agricultural activities.

“Currently presented legal requirements are being considered. Minister of Finance He also requested the opinion of the Minister of Justice, the Polish Financial Supervision Authority, the Office of Competition and Consumer Protection, and the Financial Ombudsman,” the press office of the Ministry of Finance answered.

Karolina Wisota, journalist money.pl