On credit or for lease?
Today, the financial support available to Russian farmers for acquiring agricultural equipment leaves much to be desired. The federal budget provides subsidies very rarely, if at all. Many have had to tighten their belts. AgroCentre believes that there is a way out of this plight. The company actively cooperates with banks and leasing companies which offer various financial schemes for purchase of equipment on favourable terms.
As Yulia Shubina, AgroCentre-Holding LLC financial director, noted, major agricultural enterprises mainly acquire equipment with the help of credit. Rosselkhozbank offers the targeted program “Secured credit for purchasing equipment and/or machines.” Farmers can acquire imported self-propelled equipment, tractor-drawn mounts and semi-mounts for a credit period of up to 7 years with down payment of 20% and up. Trailing and attached implements receive a loan period of up to 5 years on down payment of 15%. There are also special terms for extending loans to acquire second-hand equipment.
Some farm enterprises can afford to acquire equipment without borrowing. Leasing is employed least often.
“In many cases, due to insufficient information, farmers are afraid to use leasing solutions,” says Yulia Shubina. “However, each year we see more and more enterprises resorting to this service. Analysis shows that compared to bank credits, leasing schemes offer a number of indisputable advantages. For example, in order to formalise a lease deal, in 99% of the cases no pledge of property or surety from the enterprise proprietors is required, all of which substantially simplifies the filing procedure for acquiring agricultural equipment.”
For the past three years, AgroCentre has cooperated with such leasing organisations as MKB-Leasing, Tyumenskaya Agropromyshlennaya Lizingovaya Kompaniya JSC, and De Lage Landen Leasing LLC. MKB-Leasing processes filings within three days of an agreement to acquire any type of equipment with down payment of 10%. The terms of the German company De Lage Landen are more rigorous, i.e. the leasing period is up to 5 years with down payment of 20%. However, its payment system is more convenient, i.e. smoothly decreasing monthly or seasonal instalments. In recent years, the Tyumenskaya Agropromyshlennaya Lizingovaya Kompaniya (TALK) is becoming more and more popular. It offers optimal, namely leases on up to 5 years and 10 to 30% down payment under the agreement. Farmers may pay on a monthly, quarterly or semi-annual basis.
Dmitry Ivanov, AgroCentreZakharovo LLC director for sales:
“Even though federal financial support for farmers to acquire agricultural equipment has stopped, some regions do provide subsidies for these purposes. For example, in Tyumen oblast the subsidies which refund the cost of buying new agricultural equipment reach 30%. The situation may also improve for farmers of Chelyabinsk and Yaroslavl oblasts. Thus far, however, those projects are only on paper. We do our best to help customers acquire equipment on favourable terms. On 1 March, the leasing company AGCO Financial, which has prepared a number of special offers for purchase of AGCO equipment, will begin operations.”