Farmers from frontline territories are being pressured by old loans: how to fix the situation

Author

Valery Moisieiev

Since the beginning of 2025, 7.4 thousand agricultural enterprises have received UAH44.5 billion under various state programs, Prime Minister Denys Shmyhal reported in early May. He emphasized that Ukrainian farmers are quite actively using such support tools.

However, the Prime Minister's information is what is called an average temperature in the hospital. There is a large category of farmers who have large specific problems with financing, and the state is in no hurry to create conditions for their elimination. These are entrepreneurs who do business in frontline territories or have lost assets due to the occupation.

How to resolve the issue of credit burden on agrarian business

The All-Ukrainian Agrarian Forum (AAF), which includes leading profile associations of the agricultural sector of Ukraine, on May 6 appealed to President Volodymyr Zelenskyy with a request to sign the law based on draft law No. 12148 as soon as possible.

The law, submitted for signature to the president on April 1, provides for legal protection for agricultural producers who have lost the opportunity to conduct economic activities due to hostilities, temporary occupation or destruction of enterprises. In particular, it introduces:

a ban on the accrual of penalties (interest, fines, penalties) for the period of martial law and within a year after its end;
postponement of payments on the loan principal;
ban on the forced recovery of collateral property of farmers who have lost access as a result of hostilities or occupation.

"This law is a real salvation for hundreds of farmers who refused to work under occupation, lost their farms and houses, but are trying to revive their business in controlled territories," the AAF’s appeal states.

It should be noted that it is unclear why the farmers are asking the president to do what he must do according to the law.

Reference. Article 94 of the Constitution of Ukraine states that the president, within 15 days of receiving the law, signs it or returns it with his motivated proposals to the Verkhovna Rada for reconsideration.

If the president does not return the law for reconsideration within the established period, it is considered approved by the president and must be signed and officially promulgated.

Credit burden of farmers in frontline areas

A survey conducted in April by the Smart Country center on behalf of the All-Ukrainian Agrarian Council (AAC) showed that the total credit portfolio of the 57 surveyed enterprises in the frontline area is UAH 494.5 million. Of these, UAH362.6 million is for enterprises with assets in temporarily occupied territories, and UAH131.9 million is for enterprises in active combat zones. Only 38% of those surveyed were able to fully repay the loans they took out before the full-scale war. Other farmers remain under financial pressure, with obligations they took on until 2022.

Debts to banks, which farmers are unable to service due to loss of access to land, equipment, and infrastructure, continue to grow.

The survey results show that banks practically no longer lend to farmers in front-line areas, including those who have fully fulfilled their obligations under previous loans. Only 7% of the surveyed enterprises were able to obtain a new loan or are in the process of obtaining it. Another 18% applied to banks and were refused, mainly due to their location in the "red" zone. And most tellingly: 74% of those surveyed did not apply to banks for new loans at all, because they do not expect to receive them.

Additional logistical burden on farmers

Ukrainian farmers working in front-line areas found themselves in a difficult situation due to administrative barriers and the cancellation of preferential tariffs for product transportation. This was stated by the Deputy Chairman of the AAC Denys Marchuk. This is about the decision of Ukrzaliznytsia to cancel the discount for grain transportation from frontline areas, which was in effect for almost a year.

"The cancellation of the discount without a deep analysis of the real security situation is a blow to those who are already working on the verge of survival," Marchuk believes.

He added that some enterprises are not located in the territories included in the official list of territories where active hostilities are taking place, although in fact they are located in the risk zone, in particular the Druzhkiv and Shakhov territorial communities. VAR calls on the government to include these communities in the official list so that enterprises can count on tax benefits and other support.

"Without this, agricultural producers will be forced to terminate contracts with share owners, because they do not will be able to fulfill their obligations due to financial losses," Marchuk explained.