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19 october 2021
5 min
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Subsidies for farm machinery

Subsidies for farm machinery

A farmer's efficiency and crop yields in the fields are directly related to the quality of machinery used on the farm. Powerful and modern agricultural machinery has long been recognized as the key to success in agribusiness. KazAgroFinance JSC of Baiterek Holding, which provides the major part of the AIC leasing market, helps agrarians of Kazakhstan to solve the issue of technical fleet and equipment renewal.

In 21 years of KazAgroFinance, on leasing of equipment 61.2 thousand units of various agricultural equipment worth 830.7 billion tenge were financed and delivered to domestic farmers. This year 125 billion tenge were allocated to support domestic farmers through this financial organization. 

World of NAN has already explained the key points of subsidizing of agricultural machinery. But due to the increased interest in the issue, we decided to once again go over the leasing programs.

What programs does KazAgroFinance offer?

Funding is provided through leasing on standard terms, as well as special programs and services. The interest rate on leasing is 17% per annum, 10% is subsidized by the state, the final rate for farmers will be 7%. The product line is very wide. The conditions for farmers today have been simplified as much as possible. The terms of consideration and the package of documents have been reduced.

For example, under the "Made in Kazakhstan" program you will be able to lease domestically produced machinery at a preferential rate of 6%. A special Made in Belarus program enables to lease Belarus-made machinery and equipment at preferential interest rate subject to subsidizing of the participating countries. The interest rate for this program is 1%, 10% is covered by domestic subsidies, 6% of the Republic of Belarus.

The "Reliable Farmer" direction is aimed at maintaining long-term relationships with bona fide, well-established borrowers. Regular customers are offered an opportunity to receive machinery without a down payment - an advance payment and to pay for it after harvesting.

Under "Master leasing" you can open a credit line with a limit of financing for 1 year. The client needs only to submit an application within a year, without having to re-collect the full set of documents and application review procedures.

Under the Express-Leasing program the application will be reviewed within 5 days based on a minimum set of documents. Business plan and financial statements are not required. Customer doesn't even need to prove income.

What to do if there is no money for the advance payment?

In this case, it is possible to use investment subsidies.  They are subsidized by the state from 15 to 25% of the cost of machinery or equipment. In this case the equipment to be bought serves as a pledge for the client and will be given to him by the financial organization for use. However, it becomes a private property only after the full payment of its cost. The client can also get investment subsidies for partial early repayment of the principal debt. Applications are accepted on Qoldau.kz or through the web portal "Government for Citizens".

In 2021 the purchase of 6,227 units of equipment will be financed

Specialists "KazAgroFinance" report that to date a significant demand for machinery is observed under the standard leasing. Because the program covers all types of agricultural machinery, regardless of the country of production, and provides a wide range of conditions for the initial payment, timing of financing and use of investment subsidies.

As noted in the KAF, the leaders of the renewal of the agricultural fleet are farmers of the northern regions - North-Kazakhstan region, Akmola and Kostanay regions.  The share of applications from farmers of these regions is from 12% to 19% of all applications received by the organization. From 7% to 10% is the share of applications from agricultural producers of Pavlodar and East Kazakhstan regions.

According to the specialists, as of August 18, 2021 there have already been applications for 161.8 billion tenge, of which 6,227 units of machinery cost 118.5 billion tenge (including spring field work - 69.0 billion tenge, harvesting - 49.5 billion tenge) were financed.

The product line, the terms of financing can be found on the official website of "KazAgroFinance". There is also a leasing calculator, where you can calculate the cost of purchased machinery, download a list of documents required to apply for or obtain government subsidies.

In addition, the corporate site has a "callback" function, when the client can leave a request for a consultation with a loan manager.

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