Financing prerequisites
To finance a producer through the Contract Farming Programme the following conditions should be met:
- The producers/suppliers should be linked to specific buyers for their agricultural production through contract (Agricultural Cooperatives, producer organisations, processing companies, etc.)
- Buyers should transact with Piraeus Bank as part of the programme and Piraeus Bank should have approved a Special Purpose Working Capital (subject to a relevant application by the company / Co-op.
Covered expenditures
Contract Farming aims at financing producers to cover part of their production costs for agriculture production via the Contract Farming Card.
Piraeus Bank approves a credit limit for the producers/suppliers based on their production capacity. The credit limit, depending on the case, covers a significant part of the cost in the following cases:
- Labour
- Inputs
- Fuel
- Animal feed
- Purchase of herd replacers
- Purchase & maintenance of spare parts
Credit limit
Piraeus Bank determines the credit limit for the Contract Farming Card.
It depends on:
- The value of the agricultural production which the producers/suppliers will deliver to the buyer with whom they have a contract
- The cost of the producers/suppliers’ agricultural production inputs (expenditures for agricultural supplies, fuel, animal feed, etc.)
Duration
The duration of the crop/milk production cycle (depends on the financed product). It may be renewed under certain conditions.
Interest Rate
Variable based on the BRF (Base Rate for Farmers) index.
Interest rates are also subject to the Law 128/1975 levy. Today it stands at 0.12% for farmers or 0.60% for other professionals.
Repayment
The producer does not have to make any payments. The card’s outstanding balance will automatically be repaid through a lump-sum payment or in instalments for the raw material which the producer has delivered to the processing unit.
More specifically the buyer deposits the value of the received agricultural production in the producer’s account. The Bank withholds a certain amount or percentage of this value to cover the repayment of the card’s outstanding balance by the end of the crop or milk production cycle. The rest of the amount is at the disposal of the producer.
Loan approval fee
According to the Bank’s, Pricing Policy.
Collateral
No mortgage is required. Piraeus Bank is solely secured by the contract signed between the producer and the buyer.
