How to invest in the Latvian Agriculture Credit Market.
AgroCredit Latvia has been operating since 2011 as a non-bank lender that issues Latvian farmers loans secured with grain sale contracts. Our primary product offered is seasonal financing for current assets, which is repaid at the end of each farming season, after grain sales are completed. Fixed future grain delivery contracts serve as collateral for loans.
Our credit portfolio achieved close to EUR 7 million at the end of last season. Customers are local Latvian farmers, who operate their farms for a longer run and are known to AgroCredit and/or our partners.
Though we operate in the non-bank lending sector, our credit policy is quite conservative, and we budget credit losses below 1% of the portfolio. During our five years of operation, we have not experienced any lost credits.
Credit decisions are based on farmers’ financial standing and seeding volumes. Loans granted do not exceed 30-40% of the average expected crop harvest.
To collect on loans, we implement 3-angle financing contracts,between the farmer, grain trader and ourselves. These provide for the grain trader to withhold the amount of financing the farmer owes to AgroCredit after the farmer delivers grain to the trader. The trader then pays the money directly to AgroCredit to cover the farmer’s debt. This system is a cornerstone of our high performance portfolio rates.
AgroCredit uses different types of financing sources to ensure necessary credit resources. Around one-third of our financing comes from equity.In addition, the company has issued bonds, which are traded on Nasdaq Baltic. Bank credit lines offer another source of financing. We also use the Mintos platform to raise funds. This provides a quick and easy way to receive additional liquidity, which allows us to increase our portfolio.
Our loans are the most conservative offered on the Mintos platform, and, accordingly, come with lower interest income for the investor.
We have been using the Mintos platform for nearly a year, have been quite satisfied with the partnership. We are excited to see how this cooperation develops in the coming years.
More about Agrocredit read here.
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