Farmers increasingly in debt

The coronacrisis has affected farmers, among others. A particular problem for them was regulating fixed liabilities, which include e.g. credits or leases. That is why they more often found themselves on debtors’ lists. We are talking about hundreds of millions of zlotys of arrears.

The average debt of an average farmer amounts to over 66 thousand zlotys, which in the course of a year means an increase by over 7 percent according to data from National Debt Register (KRD). The period of debt overdue extended from 734 to 802 days. Similar conclusions concerning the growing debt can also be drawn from the BIK and BIG InfoMonitor databases.

"The beginning of the year is a result of problems that farmers faced during the first and second wave of the pandemic. Then, as a result of closing down the economy and breaking the supply chain, the demand for their products decreased," explains Łukasz Goszczyński, legal advisor and restructuring consultant.

"Farmers are subject to the same market rules as other entrepreneurs, but their situation is much more difficult - he points out.

KRD’s data show that at the end of May 2020, the total indebtedness of farmers engaged in farming and animal husbandry amounted to PLN 288.3 million. A year later, it was already PLN 301.2m. In turn, the average debt in the first five months of 2020 amounted to PLN 62,245, and more recently to PLN 66,742.

Adrian Parol, legal adviser and restructuring adviser, also draws attention to the extension of the period of overdue receivables.

It proves deepening financial problems of farmers who are overdue with payments anyway. It is not a good signal for creditors because the chance to recover money from them is decreasing - he points out.

During the pandemic, it was a particular problem for farmers to settle fixed liabilities, such as loans or leases,” Goszczyński adds.

He explains that incomes regularly dropped and installments were identical. Banks and leasing companies appeared to meet this problem. But the suspension or reduction of installments came back anyway, often with redoubled force, because the values simply accumulated.

The amount of loans repaid by farmers and agricultural companies is around PLN 30 billion. The share of loans delayed by more than 90 days, i.e. considered lost, amounts to 5.9 percent of the value. It is worth noting that this is much less than in the case of micro-entrepreneurs, where the value is over 16 percent. Farmers are therefore much more reliable payers.

(money.pl)