Poland Proposes New Working Capital Loan for Farmers with Interest Subsidy

Poland's Ministry of Agriculture and Rural Development (MRiRW) wants to broaden the financial support available to farmers by introducing a standalone working capital loan, not tied to an investment loan. The proposal is currently being reviewed by the Monitoring Committee of Poland's Strategic Plan under the EU Common Agricultural Policy for 2023–2027, and farmers could be able to apply soon.

The change concerns the intervention on investments in farms that increase competitiveness (financial instruments). The new loan would be granted by a bank with a guarantee of up to 80% of the outstanding principal and an interest subsidy of up to 75% for young farmers and up to 60% for other farms.

Revised split for investment-linked loans

The ministry also proposes a new breakdown of guarantees and interest subsidies for loans linked to investments:

• young farmers: guarantee of up to 80% and subsidy of up to 100% of interest;
• pig farms, where investments increase and maintain the sow herd: guarantee of up to 80% and a four-year subsidy, covering 100% of interest for the first two years and 50% for the next two;
• other farms: guarantee of up to 80% and subsidy of up to 50% of interest, rising to 100% if the investment helps protect the environment and climate.

Ministry's rationale

The ministry says the new loan is meant to improve farms' financial liquidity. The subsidy would apply in the first repayment period and reduce the cost of servicing the loan. Farming requires heavy spending months before sales revenue arrives. In recent years, prices of mineral fertilisers, fuel, electricity, feed and plant protection products have risen sharply, while farm product prices have not kept pace or have even fallen. Droughts and frosts also reduce yields and make income unpredictable.

The ministry notes that a similar instrument operated under Poland's 2014–2020 rural development programme and drew strong interest. In its view, the new loan would meet farmers' expectations and fill a financing gap in the sector.