Decline in Rural Loans for Land Purchases and Farm Buildings in Germany

As Landwirtschaftliche Rentenbank reported in Frankfurt at the beginning of August 2023, the utilization of promotional loans in the “agriculture” segment in the first half of 2023 increased by 303 million euros (about 315 million francs) or 27.4% to just 801 million in the first half of 2023 compared to the same period of the previous year euros (about 766 million Swiss francs).

Uncertainties inhibit investments

In the first half of 2021, the volume of the relevant program loans would have amounted to EUR 1.301 billion (about CHF 1.244 billion). The decline is a good 38%. According to Rentenbank, companies have recently asked for fewer loans for land purchases and farm buildings.

Uncertainty about the future political framework, higher interest rates and volatile markets are apparently having an increasing effect on the willingness to invest in agriculture, stated Board Spokesman Nikola Steinbock. This is particularly noticeable in animal husbandry.

In addition, “we are in the middle of the transformation to a climate-neutral and more sustainable economy,” says Steinbock. Much is uncertain and is still being discussed. Steinbock pointed out that the bank’s promotional offerings are constantly being adjusted.

“Rural development” with a strong plus

Rentenbank also recorded a decline in the “Agriculture and food industry” subsidy, particularly in machine and building finance. The new business in question was 415 million euros (about 397 million Swiss francs). That was 198 million euros (about 189 million francs) or almost a third less than in the previous year.

Contrary to the negative overall trend, however, a strong increase of 685 million euros (about 655 million francs) or three quarters to 1.60 billion euros (about 1.53 billion francs) was recorded in the “rural development” subsidy. According to the bank, this was due to the stronger demand from the state development institutes for global loans. These were used in particular to finance infrastructure measures in rural areas.