HeavyFinance takes a significant step forward in expanding its borderless marketplace, which connects small and medium-sized agribusinesses with the global investor community. Already providing individualized financing solutions in four countries, HeavyFinance enters the Poland market with the first loan already listed on the platform.
Key points about agriculture sector in Poland
- Poland is considered as a rural country, with agriculture representing a significant part of the economy in terms of output and employment. In Poland, the agricultural sector occupies 47% of the land.
- The sector is still severely fragmented and dominated by small-scale farms. More than half of the farms are under 5 hectares (ha), and almost 90% of the farms utilise less than 20 ha.
- Since Polish farmers are younger than the EU 24 average, they have a greater need for finance and technical support.
The lack of financing solutions
Fi-compass report of financial needs in the agriculture sector in Poland has identified a significant financing gap of between EUR 3.0 billion and EUR 6.2 billion. The issue particularly affects small farmers and their need for long-term loans. 98 percent of the gap is related to unmet needs of small and medium-sized farms.
The main providers of financing solutions are a large number of cooperative banks and a small number of commercial banks, both of which rely significantly on credit history, which young and promising farmers lack. As a result, young farmers represent a significant part of the gap, about 50-70 percent, which is twice the EU 24 average. Applicants often reject loan offers from traditional institutions due to non-acceptable lending conditions. Some farmers in Poland, according to the report, even did not apply for a loan due to a fear of rejection.
Main drivers for agricultural investments
- Due to the small average size of agricultural holdings, there is a need to develop agriculture production units. Farmers must expand their farms and implement more effective production methods in order to boost their output capacity.
- Modern technology adoption, particularly in the dairy and horticultural sub-sectors.
- Improving production standards, as a large portion of Poland\’s agricultural output is exported.
- Climate change adaptation raises the demand for investments in plant protection technology, such as those that protect against hail and frost, as well as farm efficiency technologies that minimize input factors like water.
Climate change and changing regulations drive the need of modernization
Demand for finance is driven by the need to enhance production standards in response to consumer demand to enable farmers to compete more successfully on international markets. To expand their exports and enter new markets, Polish farmers must adhere to a set of EU and international production standards, in terms of quality, size, food safety and packaging regulations. This requires additional investing in farm assets.
The demand for funding will rise as investments are made to enhance farms\’ resistance to environmental issues. Farmers in Poland have already been affected by the risks associated with climate change, like warmer winters, shorter springs, and summer heat waves. Farmers\’ yields are becoming more volatile as a result of this. The necessity of new farming methods is highlighted by the constantly changing situation. As a result, farmers must invest in new farming technologies, such as improved irrigation systems, and this thus increases the demand for financial solutions.
Shifting consumption patterns have also contributed to considerable changes in food production in recent years. Ecological farming is gaining traction, and more people are choosing gluten-free or lactose-free products or reducing their meat consumption. Changes in these trends have an impact on the prices farmers receive and the investments they make, influencing the financial gap.
HeavyFinance solution to farmers
The majority of investments made in Poland are for the modernization of machinery and other equipment. Working capital loans are also in high demand since they help firms stabilize cash flows and cover operating costs.
HeavyFinance specializes in providing such loans – the company has already facilitated loans for more than 300 farmers in Lithuania, Latvia, Bulgaria, and Portugal helping them modernize their farms. Since June 2020, the HeavyFinance investor community has contributed in improving the efficiency of 20.000 hectares of farmland. Now we are keen to open the Polish market to investors and significantly contribute while providing borrowers with customized financing offers tailored to their needs.
Impact investing
Those who opt to invest in the agriculture sector not only receive a solid annual return but also enable small farmers to grow and upgrade their operations. Modern technology solutions aid reduce carbon emissions while also increasing production levels to meet the growing global demand for food. You can contribute to the common goal of improving the agriculture sector by investing from 100 EUR. HeavyFinance will provide the opportunity to invest in EUR, thus eliminating the currency risk for our investors. Grow your investment portfolio while enabling farmers’ growth.
